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On Thursday, Stifel analysts maintained their Hold rating on Zoom Video Communications Inc. (NASDAQ:ZM) with a consistent price target of $85.00. According to InvestingPro data, Zoom’s stock currently trades at $82.27, with analysis suggesting the company is undervalued based on its Fair Value assessment. The first-quarter results echoed previous trends, with no significant changes in buyer behavior across the company’s Online and Enterprise segments, maintaining the company’s impressive 75.79% gross profit margins. Despite this stability, a few large U.S. customers exhibited more cautious spending, leading to extended sales cycles. However, these longer cycles did not result in customer losses.
Zoom’s management, including CEO Eric Yuan who presented his remarks via an AI Avatar, has introduced a conservative outlook in their guidance to account for these uncertainties. The analysts observed that emerging products like Customer Experience (CX) and Workvivo continued to show strong performance, contributing positively to the company’s revenue growth. This ongoing success is becoming an increasingly important part of Zoom’s financial narrative.
Additionally, the company has stepped up its share repurchase program during the quarter, a move that Stifel views as a positive sign and aligns with InvestingPro’s observation of aggressive share buybacks by management. While acknowledging these developments, Stifel’s analysts decided to reiterate their Hold rating on the stock, suggesting that they see the current stock price as fairly valued at the time of their analysis. The $85.00 price target indicates their expectation of where the stock will trade in the near term, based on their evaluation of Zoom’s financial results and market position, which includes a healthy revenue of $4.67 billion over the last twelve months.
In other recent news, Zoom Video Communications has reported first-quarter earnings for fiscal year 2026 that exceeded expectations, with revenue reaching $1,174.7 million, a 2.9% increase year-over-year, surpassing the consensus estimate of $1,166.3 million. Earnings per share also beat projections at $1.43, compared to the anticipated $1.31. This strong performance prompted several analyst firms to adjust their price targets for Zoom. Evercore ISI reaffirmed its Outperform rating with a $115 target, while Goldman Sachs raised its target to $87, and JPMorgan increased its target to $85, both maintaining a Neutral rating. Meanwhile, BofA Securities lifted its price target to $84, also keeping a Neutral stance.
Zoom’s guidance for fiscal year 2026 has been modestly raised, with a $5 million increase attributed to a price hike for Online Pro customers. The company has also acknowledged macroeconomic challenges, particularly affecting its Enterprise segment, leading to a more cautious outlook. Despite these challenges, the Online segment is expected to benefit from the pricing adjustments, contributing an additional $10 to $15 million. Analysts noted that the Enterprise net expansion rate remained steady at 98%, while the Online segment showed stability with a monthly churn rate of 2.8%. Zoom’s contact center business continues to grow, with annual recurring revenue expanding at a rate of 60% year-over-year.
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