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Investing.com - JMP Securities has reiterated its Market Perform rating on LegalZoom.com Inc (NASDAQ:LZ), citing the company’s strong brand position but ongoing competitive challenges in the business formation market. The company has demonstrated robust performance with a 71% return over the past year and maintains impressive gross profit margins of 66%, according to InvestingPro data.
The research firm acknowledged LegalZoom’s strategic advantage, noting it serves as the first service for approximately one-third of its business formation customers and maintains brand awareness approximately five times greater than any competitor. With annual revenue of $706 million and a market capitalization of $1.9 billion, LegalZoom has established a significant market presence.
JMP expressed incremental positivity regarding near-term fundamentals, pointing to healthy July business application trends and LegalZoom’s steady traffic share as encouraging indicators for the company.
Despite these positive signals, the firm highlighted persistent competitive intensity in the business formation market as a concern, particularly as LegalZoom moves away from its freemium strategy.
JMP indicated it would maintain its current rating until seeing further evidence that growth at the higher end of the market can be sustained, suggesting the company’s success will depend on continued product differentiation to justify its premium pricing.
In other recent news, LegalZoom.com reported its second-quarter 2025 earnings, meeting expectations for earnings per share at 0.15 USD. The company’s revenue surpassed forecasts, reaching 192.5 million USD, a 5.35% increase over the expected 182.72 million USD. Despite this positive financial performance, LegalZoom’s stock experienced a decline in aftermarket trading. Additionally, BofA Securities upgraded LegalZoom’s stock rating from Underperform to Buy, citing the company’s successful shift toward subscription-based services and strategic AI collaborations. The firm also raised its price target to 12.00 USD from 8.00 USD. In a similar vein, UBS increased its price target for LegalZoom to 12.00 USD, maintaining a Neutral rating due to accelerating subscription growth. LegalZoom has reported a notable acceleration in its subscription unit growth, reaching 22% in the second quarter of 2025. Furthermore, LegalZoom announced the expansion of its intellectual property services, now offering attorney-assisted provisional patent application services through LZ Legal Services.
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