On Thursday, Citi reaffirmed its Neutral stance on Zoom Video Communications , Inc. (NASDAQ:ZM), maintaining a price target of $67.00. Citi's evaluation follows Zoom's recent financial performance, which surpassed modest expectations and included a minor upward revision of its yearly forecasts.
The company's anticipated revenue growth is expected to pick up slightly in the second half of the year, supported by the positive impact of price increases and reduced customer turnover in its Online segment.
Zoom's recent earnings report featured several encouraging signs, including billing results that exceeded forecasts, an upgrade to their guidance that outperformed second-quarter results, and the lowest recorded churn rate in the Online division.
Despite these favorable outcomes, Citi highlighted some ongoing concerns that might influence the stock's performance. The resignation of Zoom's CFO, Kelly Steckelberg, and what Citi perceives as lackluster capital returns, with share buybacks approximately matching stock-based compensation and dilution, were among the issues raised.
Additionally, Citi pointed out that the updated guidance suggests a slight reduction in the expected revenue growth rate for the fourth quarter. This adjusted forecast could signal a more conservative outlook for the company's performance towards the end of the year.
Citi's analysis suggests that Zoom's shares may not experience significant movement in the near term, likely staying within a certain trading range. The firm's position reflects a careful consideration of both the positive aspects of Zoom's recent financial achievements and the uncertainties that may affect future growth and investor returns.
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