Zoom increased $ 1.75 million. Morgan Stanley says the street is too bearish.

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Zoom Video Communications

the shares are in the process of being repaired after the company valued a bid of $ 5.15 million for shares at $ 340 each, generating revenue of $ 1.75 billion before expenses. This is slightly larger than the initially $ 1.5 billion target.

The bid will nearly double the company’s holdings of cash and marketable securities, which stood at $ 1.878 billion at the end of the October quarter. Zoom (ticker: ZM) has no long-term debt.

Stifel analyst Tom Roderick says the deal adds financial flexibility, but believes the total should be higher for the company to achieve substantial growth through acquisitions. “While [the company now has] a considerable war chest, money alone does not necessarily set potential targets like

RingCentral

or

Twilio

on the table without a major component of actions in this agreement, ”he wrote. “As Zoom builds its global scale, a 10-digit war closet will also be beneficial for building aggressive infrastructure, as needed.”

Roderick noted that the company revealed Tuesday that it reached one million users for its cloud-based Zoom Phone service.

“Zoom has made remarkable progress soon with Zoom Phone,” he wrote, noting that the service is only two years old. “Looking to the future, we expect Zoom to focus on expanding its relationship with current video customers gained from the pandemic and boosting sales opportunities through the company’s growing product package.” Roderick maintained a Hold rating on the stock market, with a $ 450 price target.

Meanwhile, Morgan Stanley analyst Meta Marshall reiterated its equal weight rating and target price of $ 390. but he said he believes investors have become too baffled about the post-Covid outlook.

“Although we were once cautious, the assessment was ahead [the long-term] opportunity, with almost 40% of the highs, we think it is likely that the market has become a little too negative, “wrote Marshall. He said the Zoom Phone data shows how quickly the platform can add apps, a factor he said investors seem to have lost.

Marshall said he expects Zoom to use the money it has raised to expand the services the platform offers.

“We would notice that the company has not said anything publicly about possible mergers and acquisitions, but this expansion of the platform, similar to what they have done with Phone, makes sense as a way to monetize its installed base,” he wrote. “We continue to think that 400-450 million business customers are the most lucrative of potential customers, with application extensions in this area making the most sense to us.”

One of the main beneficiaries of the work-from-home trend, Zoom shares rose more than 760% from late 2019 to the intraday peak at $ 588.84 on October 19th. % until the closing of Tuesday. Shares of Zoom rose 5.5% to $ 376.44 on Wednesday afternoon.

Write to Eric J. Savitz to [email protected]