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Analyst’s Positive On Zoom (ZM) Stock Ahead of Earnings, Despite Concerns

Updated: 30 Aug 2021

Ahead of its second-quarter earnings release after the close on Monday, Zoom's share price is flat at $340.81 premarket.

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In the past couple of weeks, analysts have had their say on the stock, with one providing a word of warning about video application downloads…

Midway through August, Piper Sandler Analyst James Fish said he believes that Zoom Video's acquisition of Five9 was at a discount and that it could add $5 billion to Zoom over the next 10 years. Fish kept an Overweight rating and a $464 price target.

JPMorgan analyst Sterling Auty warned that download data for video collaboration applications such as Zoom, Microsoft Teams and Google Meet continued to show a downward trend that began in September 2020. Auty believes that economies reopening and students heading on summer vacations are the primary factors. The JPMorgan analyst noted that Zoom still remains the dominant platform of choice, but Google Meet has seen improving trends following upgrades in its product.

However, Auty cautioned investors about trying to make correlations with Zoom's revenue, stating that it is “too difficult to determine how many users have reduced activity enough to move either to a free offering or cancel some seats within an account.”

On the opposite end of the scale, Meta Marshall at Morgan Stanley upgraded Zoom to Overweight from Equal Weight last week, setting a price target of $400, up from $360. Marshall said the valuation of Zoom has “turned too negative,” and that enterprise momentum, combined with margin headwinds evaporating, creates a “positive setup” into the company's Q2 results.

Zoom's shares are currently flat premarket on Monday after Friday's minimal 0.05% gain.

Should you invest in Zoom Video shares?

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