EU and US could reach trade deal this weekend - Reuters
On Tuesday, Stifel analysts adjusted their outlook on Zoom Video Communications (NASDAQ:ZM), reducing the price target from $90.00 to $85.00 while sustaining a Hold rating on the company’s stock. The adjustment follows the release of Zoom’s fiscal fourth-quarter results, which showed consistent performance amid a mix of macroeconomic trends. According to InvestingPro data, Zoom maintains impressive gross profit margins of 75.8% and demonstrates strong financial health with a "GREAT" overall score. The stock appears undervalued based on InvestingPro’s Fair Value analysis. According to the firm’s analysis, both the Enterprise and Online segments of Zoom have demonstrated solid churn and retention rates at the year’s end, partly due to ongoing product development such as the introduction of Zoom AI Companion.
Stifel’s commentary highlighted the potential growth drivers for Zoom, including the Contact Center and Workvivo, which are expected to increasingly contribute to the company’s revenue. The analysts also anticipate that the introduction of paid AI SKUs in the latter half of the year and into FY27 will bolster Zoom’s financial performance. With a current ratio of 4.6 and more cash than debt on its balance sheet, Zoom appears well-positioned to invest in these growth initiatives. InvestingPro subscribers can access 6 additional key insights about Zoom’s financial strength and growth potential through the platform’s comprehensive Pro Research Report. Based on the company’s product development efforts over the past few years, Stifel suggests that Zoom has laid the groundwork for a potential return to mid-single-digit growth or better in the upcoming years.
Despite the lowered price target, the firm’s Hold rating indicates a neutral stance on Zoom’s stock, suggesting that the analysts see neither a compelling reason to buy nor a pressing need to sell at the current time. The commentary from Stifel reflects an expectation of stability in Zoom’s business, supported by the company’s strategic initiatives and product innovations.
Zoom’s F4Q results were particularly noted for their stability, which management attributed to macro trends that have been consistent with recent observations. The company’s efforts in product development, including the Zoom AI Companion, have been instrumental in maintaining solid customer retention.
The revised price target of $85.00 by Stifel takes into account these factors, while also setting expectations for Zoom’s growth trajectory based on emerging growth levers and new product offerings. The Hold rating and updated price target represent Stifel’s latest assessment of Zoom’s stock value and future prospects in the market. Notably, 23 analysts have recently revised their earnings expectations upward for the upcoming period, suggesting growing confidence in Zoom’s business model and execution strategy.
In other recent news, Zoom Video Communications Inc. reported fourth-quarter earnings for 2025 that exceeded expectations, with earnings per share (EPS) of $1.41, surpassing the forecasted $1.30. The company’s revenue for the quarter was $1.184 billion, aligning with predictions, and enterprise revenue grew by 6%, now making up 60% of total revenue. Despite this earnings beat, several analysts have maintained their ratings on Zoom’s stock. Bernstein and Piper Sandler both reaffirmed their Neutral ratings, with price targets of $89, citing Zoom’s conservative growth forecasts and challenges in the online segment. Meanwhile, Cantor Fitzgerald also maintained a Neutral rating with an $87 price target, noting a slight dip in enterprise customers but growth in those generating over $100,000 in revenue. RBC Capital Markets retained an Outperform rating with a $95 price target, highlighting signs of stabilization in the online segment and confidence in Zoom’s conservative outlook. Zoom’s guidance for fiscal year 2026 projects revenue growth of approximately 2.7%, with plans to introduce new AI products to drive future growth. Analysts have noted that Zoom’s strategic focus on AI and enterprise customers could be key factors in its long-term growth trajectory.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.