What Happened?
Shares of video communications platform Zoom (NASDAQ: ZM) rose in the afternoon session after an analyst at Rosenblatt increased the company's price target to $115 from $110 while keeping a Buy rating on the shares. The firm cited “highly bullish” channel checks and raised its revenue estimates for fiscal years 2026 and 2027 ahead of Zoom's next earnings report. The positive outlook was also tied to what the analyst called the company's “180-degree” pivot to a partner-first model. This shift in its sales approach was described as “supercharging” its efforts to bring products to market, signaling strong confidence in the company's future performance.
After the initial pop the shares cooled down to $84.56, up 1.7% from previous close.
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What Is The Market Telling Us
Zoom’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 10.8% on the news that the company reported second-quarter financial results that beat analyst expectations. The company's revenue grew 4.7% year-over-year to $1.22 billion, its fastest pace in 11 quarters, while adjusted earnings per share of $1.53 also surpassed estimates. The company also raised its full-year guidance for both revenue and adjusted EPS. The solid results prompted at least one analyst to become more bullish on the stock's prospects. Following the report, RBC Capital raised its price target on the stock to $100 from $95, maintaining an Outperform rating. The strong earnings and positive analyst sentiment fueled the stock's upward momentum.
Zoom is up 3.6% since the beginning of the year, and at $84.56 per share, it is trading close to its 52-week high of $89.03 from November 2024. Investors who bought $1,000 worth of Zoom’s shares 5 years ago would now be looking at an investment worth $204.57.
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