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Investing.com - Citizens JMP analyst Patrick Walravens has reiterated a Market Perform rating on Zoom Video (NASDAQ:ZM) as the company works to accelerate beyond its current single-digit growth rate. According to InvestingPro analysis, Zoom currently appears undervalued, with the stock showing impressive gross profit margins of 76.4%.
The firm highlighted several promising developments worth monitoring, including Zoom’s growth uptick from 3% in the first fiscal quarter to 5% in the second fiscal quarter, driven by stabilization in the online business and 7% growth in the Enterprise segment.
Citizens JMP noted that Zoom’s higher-growth businesses are approaching one billion dollars in annual recurring revenue (ARR), with Zoom Phone estimated at over $650 million, Customer Experience exceeding $100 million, and additional contribution from Workvivo.
The firm maintained its fiscal year 2026 non-GAAP earnings per share estimate of $5.81 on revenue growth of 4%, its fiscal year 2027 estimate of $5.96 on 3% revenue growth, and its fiscal year 2028 estimate of $6.13 also on 3% revenue growth.
Citizens JMP observed that Zoom currently trades at a 2026 estimated enterprise value to free cash flow multiple of 10.4x and an enterprise value to revenue multiple of 3.8x, representing a discount to the peer group median that reflects the company’s single-digit growth rate, which the firm views as fair value. For deeper insights into Zoom’s valuation and over 10 additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Zoom Communications, Inc. reported its strongest revenue growth in 11 quarters, with second-quarter fiscal year 2026 sales increasing 4.7% year-over-year to $1.22 billion. The company’s pro forma earnings per share reached $1.53, surpassing market expectations. Zoom also introduced AI Companion 3.0, enhancing its platform with new agentic artificial intelligence capabilities. This development was announced at the annual Zoomtopia conference, emphasizing the assistant’s ability to convert conversations into actions.
Analysts have responded to these developments with mixed ratings. Mizuho raised its price target for Zoom to $100, citing the company’s encouraging revenue growth. Rosenblatt also raised its price target to $110, maintaining a Buy rating due to strong growth and increased enterprise demand. Conversely, KeyBanc lowered its price target to $69, maintaining an Underweight rating despite recognizing positive performance in the Enterprise and Online segments. Piper Sandler maintained a Neutral rating with an $85 price target, noting the company’s raised fiscal year 2026 guidance but describing it as conservative.
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