UBS assumes coverage on Zoom Video stock with Neutral rating

Investing.com - UBS assumed coverage on Zoom Video (NASDAQ:ZM) with a Neutral rating and a price target of $85.00, according to a research note released Monday. According to InvestingPro data, Zoom currently appears undervalued, with the stock maintaining impressive gross profit margins of 76.4% and a strong financial health score.

The investment firm’s coverage follows discussions with multiple industry sources, revealing mixed feedback on Zoom’s consolidation strategy, positive outlook for Zoom Phone, and varied perspectives on the Contact Center offering.

UBS noted that early feedback leaned negative regarding Zoom’s ability to monetize its Custom AI Companion this year, though the firm acknowledged it remains early in the product’s development cycle.

The research indicates Zoom stock is currently pricing in 3-4% revenue growth, with UBS modeling 3.8% year-over-year growth in fiscal year 2026 (calendar year 2025) and 3.4% in fiscal year 2027 (calendar year 2026), slightly above consensus estimates.

With the core Meetings product reaching saturation, UBS identified Phone and Contact Center as the primary growth drivers for Zoom’s business, concluding that at 9 times calendar year 2026 estimated free cash flow, the risk/reward profile for the stock appears balanced.

In other recent news, Zoom Communications, Inc. has announced a strategic partnership with Oracle, allowing Zoom’s customer experience platform to run on Oracle Cloud Infrastructure. This collaboration includes Oracle implementing Zoom Contact Center for its global customer service operations, supporting service agents worldwide. Meanwhile, RBC Capital has reiterated an Outperform rating for Zoom Video, maintaining a $100 price target, citing consistent long-term margin targets. Benchmark has raised its price target for Zoom to $110, following the introduction of AI Companion 3.0 at the Zoomtopia event. Mizuho also maintains an Outperform rating with a $100 price target, highlighting AI innovations and product diversification discussed at Zoomtopia. Cantor Fitzgerald, however, maintains a Neutral rating with an $87 price target, noting the stabilization of Zoom’s legacy meeting revenue and growth in newer products like Phone and Contact Center. These developments reflect Zoom’s ongoing efforts to expand its platform and enhance its financial performance.

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