Asia tech stocks slide tracking Wall St losses amid AI doubts, govt. uncertainty
On Tuesday, Piper Sandler adjusted its outlook on ZoomInfo Technologies (NASDAQ:ZI) stock, decreasing its price target from $14.00 to $10.00, while retaining a Neutral position.
The firm cited ongoing macroeconomic challenges that have been impacting ZoomInfo's growth over the past two years, particularly highlighting issues faced in June. A significant rise in bad debt write-offs from smaller customers, who represent 33% of sales, was noted as a contributing factor.
ZoomInfo's second-quarter performance reflected these headwinds with a $16 million shortfall in revenue, leading to a downward revision of the second-half revenue forecast by $49 million.
The company is also experiencing a transition in the Chief Financial Officer position, which Piper Sandler believes could further cloud the outlook and delay any potential recovery until possibly 2025.
In response to these developments, Piper Sandler has lowered its revenue estimates for ZoomInfo by $57 million for the year 2024. Additionally, earnings per share (EPS) projections have been reduced by $0.11 to $0.90.
Despite these adjustments, the firm acknowledges ZoomInfo's free cash flow (FCF) generation, which is expected to be around $424 million for the current year, translating to approximately $1.13 per share. This strong FCF is seen as a factor that could help limit significant downside risk to the stock.
However, Piper Sandler expresses a cautious stance, pointing out that there are few immediate catalysts that might change the current negative investor sentiment towards ZoomInfo. The revised price target reflects these concerns and the adjusted financial expectations for the company.
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