Needham reiterates Buy rating on Zoom Video stock after strong Q2

Investing.com - Needham has reiterated a Buy rating on Zoom Video (NASDAQ:ZM) with a price target of $100.00 following the company’s second-quarter results. According to InvestingPro data, 22 analysts have recently revised their earnings estimates upward, while the stock currently trades between analyst targets of $65-$115.

The video communications company reported a revenue beat of $20 million, representing 170 basis points above expectations, marking its largest quarterly outperformance in several years. The company maintains impressive gross profit margins of 76.4% and boasts a strong financial health score of "GREAT" on InvestingPro.

Zoom’s growth was driven by strength in its Phone and Contact Center offerings, including Zoom Virtual Agent, which continue to increase their share of the overall revenue mix and support stabilizing growth trends.

The firm noted that Zoom’s Online segment continues to evolve toward higher-quality revenue, while Enterprise down-sell issues are diminishing, positioning the company for improved metrics such as cRPO bookings and Net Revenue Retention (NRR).

Needham believes management is taking a prudent approach by not incorporating a larger portion of the Q2 outperformance into second-half guidance, creating potential for similar beats in the remainder of fiscal year 2026.

In other recent news, Zoom Video Communications reported its fiscal second-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.53, compared to the forecasted $1.38. The company also reported revenue of $1.22 billion, slightly ahead of the $1.20 billion forecast. Zoom’s non-GAAP operating margin reached 41.3%, exceeding the consensus of 38.8%. RBC Capital raised its price target on Zoom to $100 from $95, maintaining an Outperform rating, following what it described as "solid Q2 results." Stifel, however, lowered its price target for Zoom to $80 from $85, while maintaining a Hold rating, citing the company’s strong performance in AI-powered tools. Goldman Sachs reiterated its Neutral rating with an $87 price target after noting Zoom’s largest revenue beat in four quarters. Citizens JMP also maintained a Market Perform rating, highlighting the company’s better-than-expected fiscal second-quarter results. These developments reflect a mix of analyst perspectives on Zoom’s recent financial performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.