The San Jose, California-based communications technology company Zoom is expected to report its fiscal third-quarter earnings of $1.09 per share, which represents year-over-year growth of over 10% from $0.99 per share seen in the same period a year ago.
The company, which provides video telephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of over 30% to $1.02 billion. Zoom will report 3Q FY22 earnings after market close on Monday, November 22.
According to ZACKS Research, Zoom expects revenues between $1.015 billion and $1.020 billion for the third quarter of fiscal 2022. The non-GAAP income from operations is expected to be between $340 million and $345 million.
Additionally, non-GAAP earnings are expected to be in the range of $1.07-$1.08 per share. Zoom expects its fiscal 2022 revenues to range between $4.005 billion and $4.015 billion. The company expects non-GAAP income from operations to range between $1.5 billion and $1.51 billion. In addition, non-GAAP earnings are expected to range between $4.75 and $4.79 per share, noted analysts at ZACKS.
“Reasons To Buy: Zoom Video is benefiting coronavirus-induced remote working trend. Its efforts to eradicate security and privacy flaws are expected to aid it to expand its userbase,” noted analysts at ZACKS Research.
“Reasons To Sell: Stiff competition with the entry of Facebook and Verizon in the video communication space and massive repercussion from customers due to security and privacy lapses are concerns.”
Zoom Stock Price Forecast
Twenty-one analysts who offered stock ratings for Zoom in the last three months forecast the average price in 12 months of $343.69 with a high forecast of $460.00 and a low forecast of $255.00.
The average price target represents a 34.39% change from the last price of $255.75. From those 21 analysts, 12 rated “Buy”, nine rated “Hold” while none rated “Sell”, according to Tipranks.
Technical analysis suggests it is good to sell as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.
Morgan Stanley gave the base target price of $365 with a high of $500 under a bull scenario and $180 under the worst-case scenario. The firm gave an “Overweight” rating on the communications software company’s stock.
Several other analysts have also updated their stock outlook. Stifel cut the price target to $300 from $350. Baird lowered the target price to $335 from $380. Citigroup slashed the price target to $304 from $380.
Analyst Comments
“Investors lean cautious heading into FQ3 print given ongoing concerns around SMB churn, particularly as other WFH names have underperformed. View FQ4 print as having more favourable risk/reward, but given cautious positioning, could see outperformance if SMB churn is better than expected,” noted Meta Marshall, equity analyst at Morgan Stanley.
“Zoom has established its position as the leader in video conferencing, now a growth market. The company has a meaningful competitive moat built on more than just architecture. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins are encouraging. Opportunities to expand the platform remain. Manageable churn post-COVID as a move to hybrid work setups.”
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This article was originally posted on FX Empire
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