Reports Q3 2021 results on Monday, November 30, after the close
Revenue Expectation: $ 693 million
EPS expectation: $ 0.76
Without a doubt, Zoom Video Communications (NASDAQ 🙂 is one of the biggest beneficiaries of the global COVID-19 pandemic. Millions of workers and students flocked to the videoconference service when governments worldwide imposed restrictions on working from home. Today's earnings report is likely to reflect this boom, confirming investors' extremely optimistic stance on equities.
Analysts, on average, expect sales to increase by more than 300% to $ 693 million in the company's third quarter of fiscal 2021. , while earnings per share will have increased from just $ 0.09 to $ 0.76 a share. That kind of growth could make the San Jose, California-based company one of the biggest producers of growth among businesses by 2020.
Supported by this impressive achievement, Zoom stock has become one of the best performing NASDAQ stocks this year, earning about 600%, bringing Zoom's market cap to $ 134 billion. Following this year's rally, Zoom is now worth more than 140-year-old International Business Machines (NYSE 🙂 and the high-flying chipmaker Advanced Micro Devices (NASDAQ :).
For investors just thinking of adding Zoom to their portfolio, the biggest question is whether this pandemic boom will continue once the virus has contained. Zoom management remains very optimistic and says this is just the beginning. “Zoom is built for this moment and beyond,” Chief Executive Officer Eric Yuan said in a recent statement.
"We have the platform to support what the world needs: today, tomorrow and far into the future."
More Upside
Street analysts seem to agree. Many became more optimistic about the stock after the company announced the latest upgrades to its offering at the "Zoomtopia event" in October.
BofA Securities analyst Nikolay Beliov reiterated his buy rating on Zoom, raising his price target to $ 570 from $ 475, saying the company is in the early stages of making money with the largest 2000 global companies and is making "significant progress" with its Zoom Phone offering.
Despite its popularity among consumers, the company believes that most of its future growth will come from businesses, in a market where it can thrive by combining and selling video conferencing, phone calls and text messages on one platform to companies that want to modernize their communication systems.
"We believe that Zoom's increasing relevance and continued good execution translate into both short and long term benefits," Beliov wrote in a note to customers. "In addition, new product releases and enhanced capabilities indicate Zoom's ambition. to become a more holistic collaboration and workflow platform, rather than a video and [unified communications as a service] solution, "added Beliov.
DA Rishi Jaluria of Davidson is another analyst who has identified the price target of Zoom raised from $ 460 to $ 600 after attending the Zoomtopia event, saying the company has a tremendous opportunity to grow.
“Our main takeaway was, although [Zoom] has strong traction in COVID-19, it is still under-penetrated and represents a huge market opportunity with a runway for continued growth after COVID-19, ”wrote Jaluria.
Zoom, which competes with video conferencing services from Microsoft (NASDAQ 🙂 and Google from Alphabet (NASDAQ :), last month introduced new tools to help software developers better integrate Zoom into their products. One of the introduced offerings is Zapps, which are apps that users can access without leaving the Zoom platform, including tools from Slack Technologies (NYSE 🙂
Bottom Line
Shares van Zoom have lost some momentum after this year's powerful rally. Still, for long-term investors, this weakness should be viewed as a buying opportunity. The company remains in a strong growth mode, which is unlikely to slow down given the growing need for people who are likely to choose to work and study remotely, even after the pandemic subsides.
