When the time came to start working from home, people frantically looked for a means that would allow them to keep in touch with the office without breaking the bank. For many, Zoom Video Communications (NASDAQ:ZM) proved the answer of choice, offering free tiers of service and expanded options from there. Now, with people going back to work in original offices as businesses attempt to reassert some kind of normalcy, Zoom's value might look a little tarnished. That's not what analysts think, though, and the latest picture looks even brighter for Zoom, despite its attempts at a new record high.
Picking Up New Bullish Analysts
Zoom recently gained new love from Mizuho, which led off coverage of the company at a “buy”. Impressive enough lead-off, but it gets better from there. Mizuho also led off its Zoom coverage with a price target of $550, representing a 15% upside for the company if it can actually match that target.
Essentially, Mizuho figures that the work-from-home scurry that saved a lot of companies from going completely moribund for several months will ultimately become the “new normal”, and companies will ultimately see—or be shown—the value of allowing employees to work remotely. The last several months, with some portion of same devoted to remote work, will likely serve as all the proof some employees need to advance the cause of making work-from-home no longer a perk, but a standard.
Moreover, based on Mizuho analyst Siti Panigrahi's projections, the upcoming analyst day about to be staged at Zoom will provide further insight and all the means necessary to drive more growth in Zoom's share price.
Mizuho's Not Alone on This One
That's a great assessment, and certainly, one that should spark investor interest going forward. However, one analyst in isolation wouldn't be much of a reason to drive investment in a company. That's why, happily enough for Zoom, there are plenty of other analysts chipping in on this one.
SQN Investors, for example, added 312,831 shares of Zoom to its portfolio back in the second quarter, and the third-quarter return seen so far is 88.04%. That's a huge gain, and founder Amish Mehta notes, in much the same fashion as Mizuho, that remote work is likely to be a big part of corporate operations going forward.
That seems to be a growing consensus across analysts; our latest research notes the consensus rating is a “buy”, with two analysts holding “sell” ratings, 10 sitting comfortably at “hold”, and fully 16 pointing to “buy.” September was a huge month for analysis on Zoom, as 14 analysts boosted their price targets on September 1 alone. Despite this, however, the consensus price target is sitting at $367.76, which represents a long slide down from yesterday's close of $478.55.
Buying at the Top?
Zoom has enjoyed a long and mostly uninterrupted upward climb; shares sold for just $68.72 on January 2, which means today, the company is worth around seven times what it was at the start of the year. The notion of buying in now might seem like a bad move in the making, especially given the consensus price target that's currently lower than the current share price.
However, there are some points that still make Zoom worth considering as a buy, even at these prices. First, the company is actively looking to expand, and it's taking aim at the Asia-Pacific market to help drive those gains. The company already has a data center established in Singapore, which should help the company gain a foothold therein. Already, the company has seen Zoom use increase 65-fold in terms of free accounts, and paying customers are up three times over.
Second, while there are some signs that Zoom use is slipping as some offices call employees back to the centralized operations model of the old normal, some companies clearly mean to stick with remote. Major corporations like Facebook (NASDAQ:FB), Twitter, (NASDAQ:TWTR) and Square (NYSE:SQ), among others, are planning to give employees the ability to telecommute to at least some degree, ensuring a continuing market.
So for those concerned about adding Zoom to their portfolios now, there's less a concern than you may think. The stock price is currently at its height, yes, but there's still room for the company to grow, and its currently-established market looks like it could continue on for some time to come.
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