- Morgan Stanley analyst Elizabeth Porter affirmed ZoomInfo Technologies Inc ZI with an Overweight rating and a price target of $66.
- Porter's deep dive analysis increases confidence that ZoomInfo can durably grow revenue 30%+ over the next three years while also generating 40%+ operating margins, resulting in one of the most efficient unit economics in the SaaS peer group.
- She notes that sustaining 30%+ revenue CAGR through 2024 is supported by 1) a significant greenfield opportunity with low single-digit penetration, 2) uplift in annualized contract value (ACV) as users adopt Advanced Functionality workflows, and 3) improving retention from stickier software adoption beyond company and contact data.
- The analyst points out that sustainable topline growth combined with a mid-40% operating margin yields a strong FCF growth engine, providing scale to enable investment ahead of peers.
- While shares trade at a premium EV/S/G multiple, she believes this does not correctly consider the best-in-class profitability and sees shares trading at a discount on EV/FCF/G and PEG.
- Her price target reflects a premium to the SaaS group average, given a unique combination of growth and profitability with a Rule of 40 at 80%+, well ahead of the ~25% SaaS average.
- Price Target: ZI shares traded higher by 0.72% at $46.21 on the last check Wednesday.
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