Zoom stock falls as companies lower target prices
A trader working after the Nasdaq’s opening bell in New York City on April 18, 2019.
Hit by Betancur | Getty Images
Zoom shares were down more than 16% Tuesday afternoon after the video chat company warned investors of a slowdown in sales growth, which led Wall Street companies to lower price targets for the stock.
Zoom was one of the darlings of the pandemic, moving from a relatively niche business software segment to a household product. Millions of people have used the company’s technology in the past nearly two years to keep up with school, work, or social life. But growth is slowing as people return to work and school.
BTIG, which cut its target price from $ 460 to $ 400, reiterated its buy rating but said the cut should “better reflect current market sentiment and improve the group’s multiple compression”. Deutsche Bank Research also cut its 12-month target from $ 350 to $ 280.
“While we are positive about Zoom’s strategic initiatives and investments in key growth areas, we find it more difficult to like a stock with more slower growth and increasing pressure on profitability,” Deutsche Bank wrote in a statement on Tuesday.
Baird, Guggenheim, Wells Fargo, Stifel, UBS, Piper Sandler and KeyBanc also lowered their price targets. But Wall Street is generally still optimistic about Zoom’s future.
“The slowdown in growth was and could be a headwind for stocks in the short term, although we are positive about long-term growth and platform opportunities, especially if growth rates bottom out in the next few quarters,” Baird researchers wrote on Tuesday.
Zoom revenue increased 35% from the year-ago quarter ended October 31, and slowed from the 54% growth in the previous quarter. For the fourth fiscal quarter, Zoom forecasts adjusted earnings of $ 1.06 to $ 1.07 per share on revenue of $ 1.051 to $ 1.053 billion, representing growth of 19%.
– CNBC’s Michael Bloom and Jordan Novet contributed to this report.
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