On Tuesday, ZoomInfo Technologies (NASDAQ:ZI) stock faced a downgrade from Overweight to Sector Weight by KeyBanc, reflecting concerns over the company's performance.
The decision comes amidst observations of poor execution and revised lower growth expectations. Additionally, persistent business challenges are expected to continue throughout the year and potentially into calendar year 2025.
The analyst from KeyBanc highlighted that ZoomInfo's current trading multiples are below the software sector averages, which could signal underlying issues.
As of the close on Monday, ZoomInfo was trading at 3.5 times its expected calendar year 2025 revenue and 10.6 times its expected calendar year 2025 enterprise value to free cash flow (EV/FCFF). In contrast, the software sector averages stand at 6.3 times and 38.2 times, respectively.
The downgrade reflects a significant shift in the analyst's outlook on the company, which has been impacted by a combination of internal and external factors.
The lowered growth expectations suggest that the company may not be on track to meet its previous targets. At the same time, the performance of its stock indicates a valuation that is not in line with the broader software sector.
The analyst's mention of business headwinds could have various implications for ZoomInfo's operations and financial health. Investors and industry observers will closely monitor the company's ability to navigate these challenges as it moves into the latter part of the year and beyond.
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