On Tuesday, Piper Sandler adjusted its outlook on Zoom Video Communications , Inc. (NASDAQ:ZM), increasing the price target to $89.00 from the previous $68.00, while keeping a Neutral rating on the stock. The firm noted Zoom's ongoing shift toward enterprise and direct sales, as well as its expansion into adjacent products such as Zoom Phone, Customer Experience (CX), and Workvivo.
Despite these positive developments, core Meetings products continue to face challenges, with enterprise net retention rates below 100% and a quarter-over-quarter decline in remaining performance obligations (RPO).
The analyst from Piper Sandler highlighted that while online customer churn is showing resilience, the contribution of adjacent products to the overall business remains small. This suggests that the main Meetings segment is still under pressure. Expectations include further market share gains in Contact Center as a Service (CCaaS) and more conversions to Workvivo. The discussion moving forward is anticipated to focus on Zoom's sustainable growth rate.
Amid management changes, with the new CFO Chang stepping in, the company's current product mix and strategies for extending customer relationships have been driving growth for the past two years. However, Piper Sandler forecasts a future of low-single-digit growth rates for Zoom, which could have limited upside potential unless the company engages in mergers and acquisitions or benefits from an improved macroeconomic environment.
The report concluded by acknowledging Zoom's valuation is now more aligned with value-oriented companies, factoring in the firm's business stability and the narrative surrounding artificial intelligence. Despite the raised price target, Piper Sandler maintains a Neutral stance on Zoom, suggesting there may be better investment opportunities available at this time.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Zoom's financial position and market performance, complementing Piper Sandler's analysis. Zoom's market capitalization stands at $27.4 billion, reflecting its significant presence in the video communications sector. The company's P/E ratio of 31.17 suggests that investors are still pricing in growth expectations, albeit more modestly than during the pandemic peak.
InvestingPro Tips highlight Zoom's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short-term obligations." This solid financial footing aligns with Piper Sandler's observation of Zoom's business stability. Additionally, Zoom boasts "impressive gross profit margins," with InvestingPro data showing a gross profit margin of 75.89% for the last twelve months as of Q2 2025, underscoring the company's efficient operations despite challenges in its core Meetings segment.
The stock's recent performance has been notably strong, with InvestingPro reporting a 22.58% price return over the past month and a 41.3% return over the last six months. This upward momentum is reflected in the tip that Zoom is "trading near 52-week high," which may support Piper Sandler's decision to raise the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Zoom, providing a deeper understanding of the company's financial health and market position.
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