Text size
Farmer Dot McCarthy films one of his goats making a Zoom call at Cronkshaw Fold Farm in the North West of England on February 9, 2021.
Paul Ellis / AFP via Getty Images
Zoom Video Communications
the shares have returned their initial gains after the January quarter profit report of the company’s revolt, amid constant concerns about both the valuation and the company’s post-pandemic growth rate.
One of the main beneficiaries of the trends of working from home and learning from home during the Covid-19 pandemic, Zoom recorded revenue for the quarter of $ 882.5 million, 369% more than the previous year, with adjusted revenue of $ 365.4 million, or $ 1.22 per share.
Shares of Zoom rose to 10% on Monday after trading hours and opened sharply on Tuesday. However, gains have faded despite general optimistic street comments. Shares, which traded up $ 440 earlier in Tuesday’s session, were down 7.4%, to $ 379.22 in recent trading.
The decline is likely for two reasons. One, Zoom’s startling series of three-digit growth quarters seems to be approaching, as it now faces year-on-year comparisons inflated by Covid. And two, even after falling from previous highs, stocks continue to trade at high multiple sales and profits.
JP Morgan analyst Sterling Auty on Tuesday reiterated its Neutral rating on Zoom shares, raising its target price to $ 456 from $ 450, but warns in its post-earnings research note that this could be “the last hurray” in Covid’s fantastic company. to run.
“The April quarter begins the ramp up to tougher comparisons and this will make investors continue to discuss what the appropriate post-pandemic growth rate will look like for this scale,” he writes. “There are still a lot of growth opportunities in the market in both the international and Zoom Phone segments, but the issue will be the speed and pace of post-pandemic adoption.”
Zoom expects revenue of $ 900 to $ 905 million for the April quarter, with non-GAAP profits of $ 95 to 97 cents per share. The street had projected revenue of $ 804.8 million and a non-GAAP profit of 72 cents per share.
Auty also sees a risk in the fact that accounts of less than 10 employees account for 37% of revenue. “We believe this customer base could pose a higher risk for diversion rates in the future, as it is most likely to be affected if a widely available vaccine is available,” he writes.
Citi’s Tyler Radke picked up stock coverage on Tuesday with a neutral rating and a target price of $ 501. “Although the annual guide exceeded expectations … we are concerned that the significant slowdown in growth over the year may affect stocks, especially with new product growth engines still too small to move the needle, ”he writes in a research note.
For the January 2022 fiscal year, Zoom expects revenue of $ 3.76 billion to $ 3.788 billion, up 42% from the year before the midpoint of the interval, with non-GAAP gains of 3.59 at $ 3.65 per share. Previously, the street had projected revenue of $ 3.522 billion in January 2022 with non-GAAP profits of $ 2.96 per share.
Radke’s interpretation of the guidelines for the year is that growth will drop from 175% in the April quarter to low teenagers in the second half amid very difficult comparisons.
Piper Sandler analyst James Fish, meanwhile, responded to the earnings report by raising its rating of Neutral overweight, with a new price target of $ 541 ($ 501 more). “Previously, valuation and high exposure to commercial customers who paid monthly kept us on the sidelines,” he writes in a research note. “While the quarter itself did not address this latter concern, lead metrics suggest greater exposure to business and annual / multi-year customers, with a more digestible valuation given visibility.”
Oppenheimer analyst Ittai Kidron liked the quarter and sees opportunities for the company to expand its reach to new areas. “Zoom continues to show its importance in a digital world; we believe its relevance will remain high after the Covid-19, ”he writes. But the stock valuation (25 times its estimate for 2022 sales) pauses it and maintains its performance rating.
Write to Eric J. Savitz at [email protected]