Zoom Communications (NASDAQ:ZM) stock has been in a strong bull run this month and is hovering at its highest level since June. It has rebounded by 30% from its lowest level in July and by 52% this year. This rally will face a major test as it releases its financial results.
Analysts are Boosting Zoom Communications Estimates Amid AI Boom
Top analysts following Zoom Communications have boosted their targets, arguing that it has multiple ways to monetize AI and its growth reacceleration. Top analysts from companies like Rosenblatt Securities, Bank of America, and Needham have placed a target of $130, up by 21.4% from the current level.
Therefore, the upcoming earnings reports will provide more insights on whether this growth is accelerating. The last results showed that its revenue rose by 5.5% in the March quarter, with the number of AI Companion users rising by 184%. It made $1.23 billion, with its enterprise figure rising to $755 million.
Benzinga data shows that its revenue is expected to come in at $1.27 billion, up by 4.25% from the same period last year. Its guidance for the third quarter is expected to be $1.28 billion.
These figures show that Zoom’s business is still seeing traction among customers despite the rising competition from companies like Alphabet (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT).
The slow growth has made it relatively undervalued, with the forward price-to-earnings ratio at 17.6, lower than the sector median of 23.20. It was lower than the five-year average of 19.60. Its Rule-of-40 multiple of 44.8% also shows that it is a bargain.
ZM Stock Price Technical Analysis
The daily timeframe chart shows that the ZM stock has rebounded in the past few months. It has moved from a low of $82.21 in June to the current $107.43.
The stock is slowly forming a bullish pennant pattern, which is made up of a vertical line and a symmetrical triangle pattern. The two lines of this triangle are nearing their confluence.
The Supertrend indicator has been green since the last week of July. It also sits above the 50-day moving average. Therefore, the stock will likely have a strong bullish breakout after earnings. If this happens, the initial target to watch will be at $110.9.
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