Scotiabank raises ZoomInfo stock price target to $11

On Thursday, Scotiabank (TSX:BNS) analyst Allan Verkhovski increased the price target for ZoomInfo Technologies (NASDAQ:ZI) shares to $11.00, up from the previous $10.30, while maintaining a Sector Perform rating. The adjustment followed ZoomInfo’s fourth-quarter earnings report, which showed total revenue of $309 million, surpassing expectations by 3.9%. This marked the company’s largest beat since the second quarter of 2022 and resulted in a 20% surge in the stock’s value after hours. The company’s impressive performance is reflected in its strong gross profit margin of 88.19% and recent market momentum, with the stock delivering an 18.48% return over the past week. According to InvestingPro analysis, ZoomInfo appears slightly undervalued at current levels, with 13 additional exclusive insights available to subscribers.

ZoomInfo’s performance was bolstered by its enterprise and mid-market segments, where businesses with over 100 employees have been adopting its Copilot and Operations offerings. Copilot has now exceeded $150 million in Annual Contract Value (ACV), while Operations has seen a year-over-year growth of 27%, which is 5 percentage points higher than the previous quarter. The company’s total revenue reached $1.21 billion in the last twelve months, despite a slight decline of 2.03% year-over-year.

Despite projecting a 2% decline in revenue for the fiscal year 2025, the guidance appears conservative against the backdrop of ZoomInfo’s stabilization in the small to medium-sized business (SMB) segment. The company experienced a slightly greater decline downmarket than the 9% seen in 2024. Year-end Net Revenue Retention (NRR) improved to 87%, up from 85% over the past three quarters. Additionally, when adjusting for newly disqualified SMB business, the company’s calculated Remaining Performance Obligations (cRPO) bookings are estimated to have returned to a 2% year-over-year growth.

ZoomInfo is adjusting its focus, reallocating resources to capitalize on the upmarket opportunity, which provides the flexibility to accelerate its strategic shift. Furthermore, ZoomInfo is expanding its reach beyond Sales Development Representatives (SDRs) to include account executives, account managers, and customer success managers, tapping into a user base more than three times larger than that of SDRs.

Verkhovski’s reiterated Sector Perform rating comes with the revised price target of $11, based on a 12x Calendar Year 2026 Estimated Enterprise Value/Free Cash Flow (EV/FCF) multiple. The company currently trades at an EV/EBITDA multiple of 21.28x, with a market capitalization of $4.03 billion. For deeper insights into ZoomInfo’s valuation and growth prospects, InvestingPro subscribers can access a comprehensive Pro Research Report, part of an extensive collection covering 1,400+ US equities.

In other recent news, ZoomInfo Technologies reported robust financial results for the fourth quarter of 2024, surpassing earnings expectations with an earnings per share (EPS) of $0.26 and revenue of $309.1 million, both exceeding forecasts. Analysts at Stifel have responded positively to these results, raising their price target for ZoomInfo shares to $14 and maintaining a Buy rating, citing improvements in the company’s business dynamics and net retention rate. Needham also maintained a Buy rating with a price target of $15, highlighting the company’s strong performance and strategic shifts towards serving upmarket customers.

On the other hand, ZipRecruiter faced a downgrade from Barclays (LON:BARC), which lowered the stock from Overweight to Equalweight, following its fourth-quarter earnings report. Despite reporting quarterly revenue of $111 million, ZipRecruiter experienced a full-year net loss of $12.9 million. Goldman Sachs also adjusted its outlook, reducing its price target to $8 while maintaining a Neutral rating, due to the company’s guidance for first-quarter adjusted EBITDA being below expectations.

These developments indicate a mixed outlook for the companies, with ZoomInfo showing promising growth and strategic advancements, while ZipRecruiter navigates challenges in its financial outlook and market positioning.

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