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On Wednesday, Needham maintained a Buy rating on ZoomInfo Technologies (NASDAQ:ZI) shares with a price target of $15.00. The firm’s analyst highlighted ZoomInfo’s strong performance in the fourth quarter, noting an improvement in Net Revenue Retention (NRR) to 87%, up two points from the previous quarter. This marks the first quarterly increase since the first quarter of 2022. According to InvestingPro data, the company maintains impressive gross profit margins of 88.33% and appears undervalued based on its Fair Value analysis. For deeper insights into ZoomInfo’s valuation metrics and 8 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
ZoomInfo’s recent go-to-market and product changes have been identified as pivotal in reaching an inflection point. These strategic shifts are designed to better serve the Up-Market customer segment, which is defined as companies with more than 100 employees. This segment now accounts for 70% of ZoomInfo’s Annual Contract Value (ACV) as of the end of the year and is projected to increase to 75% by the end of 2025. The company’s financial health score on InvestingPro is rated as "FAIR," with particularly strong scores in profitability and growth metrics.
The company’s CoPilot product has achieved $150 million in ACV, while its Operations OS has seen a 5-point acceleration in growth quarter-over-quarter, reaching a 27% year-over-year increase, with ACV surpassing $100 million. Management’s conservative guidance for 2025 has been seen as a strategic move, with expectations that ZoomInfo will likely resume a pattern of exceeding and elevating financial forecasts as the year goes on.
Following the fourth-quarter earnings report, ZoomInfo’s shares were valued at $11.00 each at market close, with an enterprise value to free cash flow (EV/FCF) multiple of 11.5 times. The analyst expressed confidence that the company’s valuation could see further expansion as a result of the positive fourth-quarter outcomes. Recent InvestingPro data shows the company generated $338.8 million in levered free cash flow over the last twelve months, with management actively buying back shares, indicating confidence in the company’s future prospects.
In other recent news, ZoomInfo Technologies Inc. reported robust financial results for the fourth quarter of 2024, surpassing earnings expectations. The company achieved an earnings per share (EPS) of $0.26, exceeding the forecasted $0.23, while revenue reached $309.1 million, surpassing the anticipated $297.66 million. Additionally, ZoomInfo has provided a full-year 2025 revenue guidance of $1.185 billion to $1.205 billion, reflecting cautious optimism about its growth prospects. The company also retired 46.8 million shares in 2024, reducing its outstanding shares by 12%.
In terms of strategic direction, ZoomInfo has emphasized its focus on the upmarket segment, which now represents two-thirds of the business. The company has continued to innovate in AI and data solutions, bolstering its competitive position. Analysts have noted the company’s effective execution of strategic initiatives, with Wolfe Research and Morgan Stanley (NYSE:MS) analysts highlighting the positive trends in both the enterprise and SMB segments. Furthermore, the company has been actively migrating customers to its CoPilot platform, which has shown strong product-market fit and is expected to drive further growth.
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