Here's Why Analysts Are Bullish On Zoom Despite Selloff

  • Analysts believe that the Zoom Video Communications, Inc ZM selloff may have gone too far.
  • Benchmark Co's Matthew Harrigan and other analysts saw the video-conferencing company as well-positioned as a hybrid work services provider after riding the stay-at-home boom. 
  • Analysts like Harrigan think Zoom's product offerings can make it a post-Covid winner as more employees seek flexible work arrangements.
  • Morgan Stanley said renewals for contracts signed in the early stages of Covid will have passed for another year in the March/April timeframe, which will provide a better view into enterprise customer retention.
  • Despite the shift into a more hybrid working environment, consumers will need a reliable platform for virtual communication to supplement in-person meetings, with a strong sentiment in Zoom's favor already from a user perspective, an analyst said.
  • After a more than 12-fold rise in sales in its last three fiscal years, analysts expect a 12% increase in the first quarter.
  • They see scope for a rally with the stock has cratered 85% from its 2020 pandemic peak, wiping out $135 billion of market value.
  • Most major companies now offer employees the flexibility to work from the office and home, acting as a tailwind for Zoom. Apple Inc's AAPL delay in resuming full-time office served as the cherry on the cake.
  • Contrastingly, Netflix, Inc NFLX failed to sustain a massive pull forward in new customers during the pandemic and shocked the Street with its first decline in subscribers in over a decade.
  • Price Action: ZM shares traded lower by 0.70% at $89.11 on the last check Monday.
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