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On Tuesday, KeyBanc Capital Markets reiterated an Underweight rating on ZoomInfo Technologies (NASDAQ:ZI) with a steady price target of $7.00, while the stock currently trades at $10.31. According to InvestingPro data, ZI has shown impressive momentum with a 15.97% gain over the past week. The firm’s analyst, Jackson Ader, provided commentary on the company’s performance, indicating that while ZoomInfo’s recent results might have been considered satisfactory a few weeks ago, they no longer meet the heightened expectations set by the broader software sector.
Ader pointed out that ZoomInfo’s $10 million revenue beat and a modest $5 million upward revision in annual guidance fell short of the more robust results and forecasts seen from other companies as earnings season has progressed. While the company maintains impressive gross profit margins of 87.83%, according to InvestingPro, Ader suggests the current market conditions demand more significant performance to warrant a more favorable view on the stock.
The analyst acknowledged the positive tailwinds discussed by ZoomInfo, which could present real opportunities for the company. However, Ader expressed skepticism about whether these tailwinds would be substantial and enduring enough to offset the challenges faced in the downmarket.
ZoomInfo Technologies, which specializes in go-to-market intelligence solutions, reported its earnings in late April. The company’s financial results have been scrutinized within the context of the entire software sector’s performance. Despite its achievements, KeyBanc’s stance reflects a cautious outlook on the company’s ability to outperform in a competitive and rapidly evolving market landscape.
KeyBanc’s analysis suggests that while ZoomInfo may be capitalizing on certain market opportunities, the current environment requires companies to surpass expectations significantly to stand out among peers and justify an upgrade in stock ratings or price targets. InvestingPro analysis indicates the stock is currently undervalued, with analyst targets ranging from $6 to $15, and the company maintains a GOOD overall Financial Health Score. Subscribers can access 8 additional ProTips and a comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.
In other recent news, ZoomInfo Technologies reported its first-quarter 2025 earnings, exceeding market expectations with an earnings per share (EPS) of $0.23, surpassing the forecasted $0.22. The company’s revenue for the quarter was $306 million, which also beat the anticipated $295 million. Despite this positive financial performance, the company’s revenue showed a slight 1% year-over-year decline. ZoomInfo’s strategic focus on expanding its upmarket presence was noted, with upmarket revenue growing by 3% year-over-year and now representing 71% of total revenue. Analyst firms have varied views on the company’s stock; Stifel maintained a Buy rating with a $14 price target, while KeyBanc reiterated an Underweight rating with a $7 target, citing insufficient positive developments. Goldman Sachs adjusted its price target to $8.50 from $7.50 but kept a Sell rating, noting concerns about the sustainability of growth in the upmarket segment. JMP Securities rated the stock as Market Perform, reflecting mixed results in the first quarter. These developments indicate a strategic shift for ZoomInfo, with a focus on expanding its product offerings and market influence, particularly in upmarket sectors.
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