Zoom (ZM): “limited risk reward at these levels”, MKM Partners downgrades, lowers target
By Vlad Schepkov
MKM Partners analysts downgraded Zoom (NASDAQ:) to a “Neutral” rating from “Buy,” and lowered their price target on shares to $75 from $100 citing negative effects on the business from the growing macro pressures.
In their latest note, the analysts highlighted that they previously modeled “post-pandemic normalized growth (10%), transition to enterprise growth from online, international expansion, and adjacent product growth.”
However, the challenging macro environment has put pressure on many areas of the company’s business, most notably they now see “limited upside on Meetings because of the market saturation of video-paid seats and low net new logo adds.”
They further note the slowing enterprise growth – 22.5% Y/Y in FY23, 14.8% Y/Y in FY24 – and see “little upside to top-line growth near- to mid-term.”
MKM Partners analysts thus lower their 2024 revenue growth estimate to “4.5% Y/Y, down from our prior estimate of 6.7%” and see “limited risk reward at these level”, as they downgrade the stock to a “Neutral” rating and lower the Price Target to $75 from $100.
Shares of Zoom closed at $69.51 yesterday, and are up nearly 6.5% YTD.
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