Tuesday, Baird raised the price target on shares of Zoom Video Communications , Inc. (NASDAQ:ZM) to $100 from $77, while maintaining an Outperform rating on the stock. The firm's decision came after Zoom reported strong fiscal third-quarter results, which showed significant improvements in enterprise and total revenue growth. This growth has been anticipated as a potential catalyst for the company's stock performance.
The company's shares experienced a slight decline in after-hours trading following the earnings release, despite the company's year-to-date stock increase of 24%, compared to the S&P 500's 26% rise.
The dip was attributed to questions surrounding billing growth and future financial guidance. However, Baird's analyst suggests that the company's conservative guidance could be a strategic move and remains encouraged by the progress in Zoom's enterprise segment.
Zoom's performance is viewed favorably as a value idea by Baird, with the stock trading at 11.4 times the firm's fiscal year 2026 free cash flow forecast. This optimistic outlook on Zoom's valuation has contributed to the increased price target.
The company's recent earnings report and subsequent stock movement highlight the ongoing interest in Zoom as an investment, particularly as it continues to expand and solidify its position in the enterprise market. The new price target of $100 reflects Baird's confidence in Zoom's growth trajectory and future financial performance.
In other recent news, Zoom Video Communications has reported a slight revenue increase in its third-quarter earnings, exceeding its financial guidance. The company's total revenue grew by approximately 4% year-over-year to $1.178 billion, demonstrating stability in both enterprise and online customer segments.
Morgan Stanley (NYSE:MS) maintained an Equalweight rating on Zoom with a steady price target of $86.00, while Goldman Sachs and Citi also maintained Neutral ratings. Bernstein increased its price target for Zoom, citing growth in high-value customers and improved customer retention metrics.
Zoom has shown progress in its emerging products, notably its Contact Center and Workvivo offerings, the latter benefiting from a partnership with Meta (NASDAQ:META). The company's commitment to AI innovation is underscored by the introduction of Zoom AI Companion 2.0 and plans for industry-specific AI solutions.
Despite these positive developments, analysts from Goldman Sachs, Citi, and Bernstein expressed cautious stances due to concerns about the sustainability of revenue growth. These are recent developments that investors should consider in their analysis of Zoom Video Communications.
InvestingPro Insights
Recent data from InvestingPro reinforces Baird's optimistic stance on Zoom Video Communications (NASDAQ:ZM). The company's market cap stands at $27.4 billion, with a P/E ratio of 31.17, indicating investor confidence in its earnings potential. Zoom's impressive gross profit margin of 75.89% for the last twelve months as of Q2 2025 aligns with one of the InvestingPro Tips highlighting the company's "impressive gross profit margins."
InvestingPro Tips also point out that Zoom "holds more cash than debt on its balance sheet" and has "liquid assets exceed short term obligations," suggesting a strong financial position that could support future growth initiatives. This financial stability complements Baird's view of Zoom as a value idea.
The stock's recent performance has been noteworthy, with InvestingPro data showing a 22.58% price return over the past month and a 41.3% return over the last six months. These figures align with the InvestingPro Tip indicating a "strong return over the last month" and "large price uptick over the last six months," which may contribute to the stock "trading near 52-week high" as another tip suggests.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips on Zoom, providing a deeper understanding of the company's financial health and market position.
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