Zoom Price Target (ZM) Lowered Despite Solid Earnings, Stock Gains Into Open

Zoom Communications' stock (NASDAQ: ZM) is trading up 4.2% in this morning's pre-market following a strong earnings print, yet one analyst has gone against the crowd with a price target cut.

KeyBanc's view clashes with raised fiscal year guidance and strong second-quarter performance, creating uncertainty around the stock's near-term trajectory. Despite demonstrating resilience in its Enterprise segment and exceeding earnings expectations, the stock's future hinges on its ability to maintain growth amidst macroeconomic pressures.

KeyBanc lowered its price target on Zoom to $69 from $73, maintaining an “Underweight” rating. While acknowledging positive signs in the Enterprise and Online segments, the firm cited increased macroeconomic scrutiny following the first quarter as a cause for concern. This cautious outlook contrasts with Zoom's own raised guidance for fiscal year 2026.

Zoom has increased its revenue forecast to between $4.83 billion and $4.84 billion, a bump from the previous $4.81 billion to $4.82 billion range. The adjusted profit per share projection has also been raised to between $5.81 and $5.84, up from $5.56 to $5.59.

The company anticipates full fiscal year free cash flow between $1.74 billion and $1.78 billion. These improved projections are fueled by demand for Zoom's AI-powered tools, including the Virtual Agent 2.0, and the continued adoption of hybrid work models.

The company's second-quarter results, revealed revenue of $1.22 billion and adjusted earnings of $1.53 per share, both exceeding analyst expectations. The Enterprise segment demonstrated particular strength, with the number of customers contributing more than $100,000 in trailing 12-month revenue increasing by 8.7% year-over-year to 4,274. The remaining performance obligation also rose, exceeding 5% year-over-year to approximately $4 billion, signifying a healthy pipeline of future revenue.

Analyst perspectives remain divided. While KeyBanc adopts a cautious stance, Jefferies highlights significant increases in free cash flow forecasts despite elevated capital expenditures related to AI investments, suggesting potential for future growth. BTIG emphasizes the strong performance of Zoom's Enterprise segment, particularly its phone, contact center as a service (CCaaS), and Workvivo products, as key drivers of growth.

The divergence between analyst opinions and Zoom's internal optimism creates a complex picture. This morning's price action indicates that the bulls are winning out early, but it could be an interesting period ahead as the street continues to adjust models off the back of last night's guidance.