Zoom Video's Future: Analyst Sees 2,138% Upside Potential

A recent report highlights the potential upside of Zoom Video Communications, with a forecasted value of $1,500 per share by 2026. However, investor confidence appears to wane, as the company's stock has significantly decreased from its pandemic highs.

Date: 21-09-2024

AI Rating: 5

Company Overview

Zoom Video Communications, known for its videoconferencing software, has faced challenges post-pandemic, with its stock trading 88% below its record high. Despite this decline, it remains a market leader, holding about 55% market share in videoconferencing.

Financial Highlights

Recent financial results reveal that Zoom experienced revenue growth of only 2% to $1.1 billion in Q2 2025. The non-GAAP net income increased by 4% to $1.39 per diluted share, indicating modest growth. However, the decline in enterprise customer count by 12% raises concerns about future revenue streams, as existing customers spent 2% less year-over-year.

Management Insights

Encouraging growth is noted in new product adoption, with Zoom Contact Center customers doubling and high engagement with AI tools. The increase in remaining performance obligation by 8% suggests potential sales acceleration, which may provide some optimism for investors.

Valuation Concerns

Despite a forecasted annual earnings growth of 8.4% over the next three years, the current valuation of 24.1 times earnings appears somewhat pricy. The PEG ratio of 2.9 is below the three-year average of 5.5, suggesting that the stock might be undervalued in relation to its growth expectations.

Conclusion

While Zoom's stock has potential upside with a 12-month price target of $74, investors should approach with caution given the recent trends in customer count and spending. The mixed outlook might lead to volatility in stock prices in the near term.

Stocks: ZM