Yahoo Finanza Zoom Trading Sharply Higher After Blowout Quarter
Zoom Video Communications Inc. (ZM) is trading higher by more than 8% in Tuesday’s pre-market after reporting blowout Q4 2021 top and bottom line results. The company posted a profit of $1.22 per-share in the quarter ending on Jan. 31, much better than $0.79 estimates, while revenue surged 368.8% year-over-year to $882.49 million, beating $810.97 million expectations. Gross margin rose to 69.7% from 66.7% as a result of a seasonal decline in audio usage.
Managing Post-COVID Growth
The video conference software provider sharply raised Q1 and FY2022 EPS and revenue guidance but still expects high churn rates through the year, with many customers getting vaccinated and leaving their homes, returning a sense of normalcy. Zoom had 467,100 customers with more than 10 employees at the end of the fourth quarter, up 470% on an annualized basis, and heads into the new reporting year with $4.24 billion in cash and equivalents.
Zoom Phone could replace lost meeting income in coming quarters. As Stifel analyst Tom Roderick notes: “While the market for IP-based PBX equipment is a competitive one, Zoom has made remarkable strides in short order with Zoom Phone. Looking ahead, we expect Zoom to focus on expanding its relationship with current video customers gained from the pandemic and driving up-sell opportunities through the company’s growing product suite. After experiencing unprecedented customer growth last quarter of 485% among customers with 10+ employees, we are reminded of the powerful addressable opportunity in the enterprise for Zoom.”
Wall Street and Technical Outlook
Wall Street consensus had grown more cautious on the company’s long-term outlook prior to the earnings release, with an ‘Overweight’ rating based upon 13 ‘Buy’, 2 ‘Overweight’, 15 ‘Hold’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $340 to a Street-high $610 while the stock is set to open Tuesday’s session about $5 below the median $450 target. This mid-range placement could support a rapid advance toward the $500 level.
Zoom broke out above the 2019 high at 107.34 in February 2020 and entered a powerful trend advance that posted an all-time high at 588.84 in October, A pullback accelerated in November after positive vaccine news triggered a rotation out of COVID-19 beneficiaries. The decline reversed at the 200-day EMA in January, yielding a bounce, followed by a successful support test last week. This bullish price action completes a double bottom that should signal the end of the five-month correction.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.
This article was originally posted on FX Empire
