As the company lowered its price target, Zoom stock fell 10% in pre-market trading

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After the video chat company warned investors that income growth was slowing, Zoom’s stock price fell 10% in premarket trading on Tuesday, causing some companies to lower their target prices for the stock.

Zoom is one of the darlings of the pandemic, developing from a relatively niche business software field to a home product. In the past two years, millions of people have used the company’s technology to keep up with school, work or socializing. But as people return to work and school, growth is slowing.

BTIG lowered its target price from US$460 to US$400 and reiterated its buy rating, but stated that the reduction was to “better reflect the current market sentiment and the multiple compressions of the group”.

Deutsche Bank Research also lowered its 12-month target from $350 to $280.

The researchers wrote in a report on Tuesday: “Although we are optimistic about Zoom’s strategic initiatives and investments in key growth areas, we find it harder to like a company with a sharp slowdown in growth and increased pressure on profitability. stock.”

Baird, Guggenheim, Wells Fargo, Stifel, UBS, Piper Sandler and KeyBanc also lowered their target prices. But Wall Street is generally still optimistic about the future of Zoom.

Baird researchers wrote on Tuesday: “Slowing growth has been and may continue to be a headwind for recent stocks, although we remain optimistic about long-term growth and platform opportunities, especially if the growth rate bottoms out in the next few quarters. Circumstances.”

Zoom’s revenue increased by 35% year-on-year for the quarter ended October 31, which was lower than the 54% increase in the previous quarter. For the fourth fiscal quarter, Zoom expects adjusted earnings per share of US$1.06 to US$1.07 and revenue of US$1.051 billion to US$1.053 billion, which means an increase of 19%.

– CNBC’s Michael Bloom and Jordan Novet contributed to this report.

Subscribe to CNBC on YouTube.


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