Rosenblatt starts Zoom Video at Neutral, sees better opportunities elsewhere

By Senad Karaahmetovic 

Rosenblatt Securities analysts initiated research coverage on Zoom Video Communications (NASDAQ:) at Neutral with a price target of $75 per share, which implies an upside potential of less than 10%.

“The stock is currently trading at 3.5x our FY24 revenue estimate of $4.5B. We believe this to be a fair valuation as the company growth profile of 1.6% Y/Y falls below the 16% average of its peer group. We believe the multiple is unchanged with revenue growth rate 4.4% Y/Y in FY25,” the analysts wrote in the initiation note.

The analysts could get more positive on ZM stock when “revenue contribution, retention levels, international contribution and growth of its cohort solutions.”

While they opted to stay on the sidelines for ZM, they are more positive on Five9 (NASDAQ:), RingCentral (NYSE:), and 8×8 (NASDAQ:).

On FIVN, the analysts wrote:

“We believe the stock deserves to be re-rated at least halfway back to its pre-pandemic range of 10x-12x. This new level would be supported by better growth, profitability and increased exposure to AI/Automation to its product profile and expanding its market reach upmarket and internationally.”