On Tuesday, Baird adjusted its outlook on Zuora Inc . (NYSE:ZUO) shares, increasing the price target to $10.00 from the previous $8.00. The firm maintained a Neutral rating on the stock despite the company's solid performance in the recent quarter.
Zuora, a cloud-based subscription management platform provider, delivered a quarter that surpassed expectations in both revenue and profitability.
Nevertheless, the company experienced a decline in the number of customers with an annual recurring revenue (ARR) greater than $250,000. This was attributed to some clients reducing their scale, which Baird notes as a consequence of macroeconomic challenges affecting larger deals.
The company's financial outlook for fiscal year 2025 was mostly confirmed, with a slight increase in the projected earnings per share (EPS) by $0.01. Zuora anticipates that both ARR and net retention rates may face some pressure in the second and third quarters of the year. However, improvements are expected in the fourth quarter.
Zuora is also preparing to host its Subscribed Live event towards the end of June. The event is likely to provide further insights into the company's strategies and performance.
Baird concludes by indicating that before adopting a more positive stance on Zuora's stock, it will be monitoring the company's ongoing execution and the potential easing of macroeconomic headwinds.
InvestingPro Insights
With Baird's updated outlook on Zuora Inc. (NYSE:ZUO), investors may find additional context through real-time data and insights from InvestingPro. Zuora's financial health appears robust, holding more cash than debt on its balance sheet, and analysts are optimistic, predicting the company will turn profitable this year. The company's stock price has shown a strong return over the last three months, with a 16.07% price total return, which aligns with Baird's improved price target.
InvestingPro data indicates a market capitalization of $1.48 billion and a high Price / Book multiple of 10.6, suggesting that investors value the company's assets quite generously. Revenue growth remains positive, with the last twelve months as of Q1 2025 showing a 7.97% increase, which could be a signal of the company's resilience and potential for future growth. Despite not paying a dividend, Zuora's commitment to growth and the expected profitability could be attractive to growth-focused investors.
To gain more insights and tips on Zuora, including additional PRONEWS24 exclusive tips, investors can visit https://www.investing.com/pro/ZUO. There are a total of 9 InvestingPro Tips available, which can provide deeper analysis and further inform investment decisions.
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