Zoom Video Communications Shares Drop 15%; Analysts Respond to Lowered Fiscal Year Outlook
August 23 2022 - 12:44PM
Dow Jones News
By Kathryn Hardison
Shares of Zoom Video Communications Inc. continued to fall
Tuesday, declining 15% to $82.50, after it lowered its full-year
guidance, leading multiple analysts to cut their target prices for
the company.
The San Jose, Calif.-based company, which saw business surge
during the pandemic, reported Monday softer-than-expected revenue
for the second quarter. Zoom cited the weight of the strong dollar
and its slowing online business as more people return to the office
and rely less on the video conferencing platform.
Meanwhile, Zoom had about 204,100 enterprise customers by the
end of the second quarter, up 18% from a year ago. Zoom's other
offerings, like Zoom Phone and Zoom Contact Center, continued to
build out during the recent period.
Zoom now sees full-year adjusted earnings per share of $3.66 to
$3.69 on a revenue midpoint of $4.39 billion.
Mizuho Securities USA's Siti Panigrahi and Alexander Kim said in
a note that they see this fiscal year as a transition year as Zoom
works to build a post-pandemic growth profile. They slashed their
price target to $120 from $190 and maintained a buy rating.
Benchmark's Matthew Harrigan also gave Zoom a buy rating and
lowered his target price to $118 from $128. He said Benchmark sees
Zoom growing faster than anticipated in its other product areas,
like Zoom Phone.
Analysts at Stifel recommended a hold on Zoom and lowered their
price target to $90 from $120.
"We continue to believe that Zoom has a solid product and
intriguing market positioning in the enterprise space, but the
online business will remain a counterbalance to enterprise success
in the near term," Stifel analysts said in a note.
Shares traded 55% lower for the year.
Write to Kathryn Hardison at kathryn.hardison@wsj.com
(END) Dow Jones Newswires
August 23, 2022 12:29 ET (16:29 GMT)
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