Street View: Sustaining long-term growth seems to be Zoom's Achilles heel

Zwahlen Et Mayr SA

23/11/2021 11:14

** Zoom Video Communications Inc's  ZM.O  third-quarter
revenue growth rate slowed to 35%, the company's lowest since
its market debut in 2019, as demand for its video-conferencing
tools eased from the pandemic-fueled heights last year
 urn:newsml:reuters.com:*:nL4N2SD3CO
    ** Shares of ZM down 8.04% at $222.81 premarket
    
    MARGINS TO DIP
    ** Piper Sandler ('overweight," PT:$299) says there is
better churn stability, but the long-term growth resilience
remains in question
    ** "Slowdown in lead metrics and net-additions is concerning
ahead of FY 2023 guide next quarter" - Piper Sandler
    ** Daiwa Capital Markets ("sell") says questions remain on
how new customer demand and customer churn rates will stabilize
in the core business following the loosening of COVID-19
restrictions
    ** Evercore ISI ("in line," PT:$235) expects margins to come
down in FY2023 as co increases its investments
    ** "ZM's valuation better reflects the challenges ZM will be
going up against (tougher comps, churn, competitive dynamics),
but the setup and momentum heading into CY22 are skewed to the
downside"  - Evercore ISI
    ** BTIG ("buy," PT:$400) expects margins to fall over the
next 12 months as ZM heads into a heavy investment cycle
    ** J.P.Morgan ("overweight," PT:$385) expects growth to
recover next fiscal year after bottoming out in Q3, as Zoom's
Phone, Rooms, and Events services will drive business
    ** "We expect larger company contributions to be the key to
growth, not the under 10 employees and personal use" - JPM

 (Reporting by Siddarth S in Bengaluru)
 ((Siddarth.s@thomsonreuters.com;))