Zoom rises as Jefferies turns bullish on AI monetization plans

Zoom Communications

19/12/2024 13:21

** Shares of video conferencing firm Zoom Communications  ZM.O 
up 2.2% to $83.87 before the bell as Jefferies upgrades to 'buy'
from 'hold', citing potential for AI monetization to accelerate
rev growth
    ** Jefferies hikes PT by $15 to $100, implying ~22% upside
to stock's last close
    ** Co's plans to monetize product innovation through its AI
Companion Add-on launch marks positive strategy shift, Jefferies
analyst Samad Samana says in note, adding "even single-digit
adoption could materially impact FY26 rev growth"
    ** AI products will embed ZM's platform into some enterprise
workflows, increasing "stickiness and reducing churn," Samana
said
    ** Samana also thinks management's "soft guidance" for
anticipated F4Q25 exit growth rate (+2.7% y/y) sets a
"reasonable bar" for FY26
** Last month, ZM's low single-digit annual rev growth forecast
disappointed Wall Street, as it faces stiff competition from
Microsoft's  MSFT.O  Teams and Cisco's  CSCO.O  Webex
    ** Now, of 33 analysts covering ZM, recommendation breakdown
is 4 "strong buy", 8 "buy", 19 "hold" and 2 "sell" ratings;
median PT of $91.40 up from $75 a month ago, per LSEG data
    ** Through Weds close, shares up 14% YTD. Stock's 1-yr low
is $55.06 (Aug 12) and 52-week high is $92.80 (Nov 25)

(Lance Tupper is a Reuters market analyst. The views expressed
are his own)
((lance.tupper@tr.com 1-646-279-6380))