Stifel maintains Buy rating on ZoomInfo stock after workforce cuts

On Tuesday, Stifel analysts reaffirmed a Buy rating and a $14.00 price target for ZoomInfo Technologies stock (NASDAQ: GTM), which currently trades at $10.31. According to InvestingPro data, analyst targets range from $6 to $15, with 8 analysts recently revising their earnings estimates upward. The decision follows ZoomInfo’s announcement of a workforce reduction aimed at enhancing the company’s growth and efficiency by focusing on higher-value markets.

After markets closed on Monday, ZoomInfo revealed plans to cut approximately 6% of its workforce in the second quarter of 2025. The specific roles affected were not disclosed, but the reduction is expected to impact positions related to downmarket clients. This move aligns with the company’s strategy to concentrate resources on more profitable upmarket segments, where margins are significantly higher.

ZoomInfo’s management has been vocal about their goals to decrease the proportion of annual contract value (ACV) from downmarket clients, which currently stands at 29%, to 20% in the coming years. This shift is part of the company’s broader efforts to capitalize on the stronger unit economics present in upmarket opportunities. InvestingPro data shows the company maintains impressive gross profit margins of 87.86%, supporting its strategic focus on higher-value segments.

During a recent event in New York, ZoomInfo highlighted that the margins for upmarket clients are in the mid-40s, compared to mid-teens for downmarket clients. This disparity underscores the company’s strategic focus on reallocating resources to areas with greater financial returns.

Stifel’s reaffirmation of the Buy rating and price target reflects confidence in ZoomInfo’s strategic direction and its potential to achieve durable and efficient growth through these workforce adjustments. According to InvestingPro analysis, the stock appears undervalued at current levels. Discover 7 more exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription, including detailed insights from the Pro Research Report covering what really matters for GTM’s future performance.

In other recent news, ZoomInfo Technologies reported first-quarter results that exceeded expectations, driven by strong sales from enterprise and mid-market customers. Despite slight weakness in the small and medium-sized business sector, the company’s performance led Jefferies to maintain a Buy rating with a $15 price target, highlighting improved business fundamentals. DA Davidson also adjusted its price target to $10, up from $8, while keeping a Neutral rating, citing steady net revenue retention and early benefits from restructuring efforts. Meanwhile, KeyBanc Capital Markets reiterated an Underweight rating with a $7 price target, noting that ZoomInfo’s performance did not meet the heightened expectations of the broader software sector. Stifel, however, maintained a Buy rating and a $14 price target, emphasizing the introduction of GTM Studio as a significant enhancement to ZoomInfo’s offerings. Additionally, ZoomInfo announced a strategic partnership with Five by Five Data to enhance its B2B data offerings, aiming to improve data accuracy and reduce data decay. The collaboration is expected to provide more actionable insights for customers’ go-to-market strategies. These developments reflect ZoomInfo’s ongoing efforts to navigate economic challenges and expand its market influence.

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