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On Thursday, Piper Sandler adjusted its outlook on Zoom Video Communications Inc. (NASDAQ:ZM), increasing the price target to $85.00, up from the previous target of $77.00. Despite the raised target, the firm maintained a Neutral rating on the company’s shares. The adjustment follows an assessment of Zoom’s recent quarterly performance, which was deemed relatively normal.
The analyst from Piper Sandler noted that Zoom’s newer products, including CX, Phone, ZVA, Workvivo, and AI Companion, are gaining traction within the company’s existing customer base and contributing to longer deal durations. These products are seen as a positive influence on the normalized Direct growth of the company. While the core business faces challenges, InvestingPro analysis reveals strong fundamentals, with the company maintaining a healthy financial position and zero debt concerns. Revenue growth stands at 3.05%, with the company generating robust free cash flow. Want deeper insights? InvestingPro offers 8 additional key tips about Zoom’s financial health and growth prospects.
Despite these challenges, Piper Sandler views the guidance dynamics as conservative and finds reasons for encouragement. The firm highlighted the Online Pro price increase, the size and growth of CX, adoption of the CX Elite package, acceleration of Workvivo, and sustainability of the Phone product as positive indicators. The analyst believes that while Zoom is showing signs of stabilization in its core offerings, the company requires a catalyst to significantly accelerate its growth trajectory. With a market capitalization of $25.08 billion and a P/E ratio of 25.05, Zoom maintains a strong financial health score of "GREAT" according to InvestingPro’s comprehensive analysis, available in the detailed Pro Research Report.
The commentary from Piper Sandler suggests that Zoom’s performance and future prospects are a balance between its core offerings and the growth of adjacent products. The firm’s stance remains neutral, reflecting a cautious optimism about the company’s ability to find the necessary catalyst to drive meaningful growth. The new price target of $85.00 represents Piper Sandler’s updated valuation of Zoom’s stock based on the current business environment and the company’s strategic initiatives.
In other recent news, Zoom Video Communications Inc. reported its first-quarter earnings for fiscal year 2026, showing a modest beat and an increased full-year guidance. The company exceeded revenue expectations with $1,174.7 million, marking a 2.9% year-over-year increase, and surpassed consensus estimates of $1,166.3 million. Earnings per share came in at $1.43, exceeding projections of $1.31. The company also raised its full-year revenue guidance by $15 million, attributing this to an anticipated price increase for its Online Pro customers.
Analysts have maintained various ratings on Zoom’s stock. Stifel reiterated a Hold rating with an $85 price target, while Bernstein maintained a Market Perform rating with an $89 target. BofA Securities raised its price target from $79 to $84, keeping a Neutral rating, and Evercore ISI reaffirmed an Outperform rating with a $115 target. Meanwhile, Goldman Sachs adjusted its price target to $87 from $82, maintaining a Neutral rating.
Zoom’s recent financial results and updates on its guidance have been mixed, reflecting both strengths and challenges. The company continues to face cautious spending behavior among some large U.S. customers, leading to longer sales cycles. Despite this, emerging products like Customer Experience and Workvivo are contributing positively to revenue growth. The company has also been active in share repurchase programs, signaling confidence in its financial stability.
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