Zoom Video Communications Shares Drop 15%; Analysts Respond to Lowered Fiscal Year Outlook

By Kathryn Hardison

Shares of Zoom Video Communications Inc. continued to fall Tuesday, declining 15% to $82.50, after it lowered its full-year guidance, leading multiple analysts to cut their target prices for the company.

The San Jose, Calif.-based company, which saw business surge during the pandemic, reported Monday softer-than-expected revenue for the second quarter. Zoom cited the weight of the strong dollar and its slowing online business as more people return to the office and rely less on the video conferencing platform.

Meanwhile, Zoom had about 204,100 enterprise customers by the end of the second quarter, up 18% from a year ago. Zoom's other offerings, like Zoom Phone and Zoom Contact Center, continued to build out during the recent period.

Zoom now sees full-year adjusted earnings per share of $3.66 to $3.69 on a revenue midpoint of $4.39 billion.

Mizuho Securities USA's Siti Panigrahi and Alexander Kim said in a note that they see this fiscal year as a transition year as Zoom works to build a post-pandemic growth profile. They slashed their price target to $120 from $190 and maintained a buy rating.

Benchmark's Matthew Harrigan also gave Zoom a buy rating and lowered his target price to $118 from $128. He said Benchmark sees Zoom growing faster than anticipated in its other product areas, like Zoom Phone.

Analysts at Stifel recommended a hold on Zoom and lowered their price target to $90 from $120.

"We continue to believe that Zoom has a solid product and intriguing market positioning in the enterprise space, but the online business will remain a counterbalance to enterprise success in the near term," Stifel analysts said in a note.

Shares traded 55% lower for the year.

Write to Kathryn Hardison at [e-mail]

(END) Dow Jones Newswires

August 23, 2022 12:29 ET (16:29 GMT)

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