Zoom Nabs Bull Notes After Earnings, Full-Year Forecast

No less than six analysts lifted their price targets

Deputy Editor
Jun 3, 2020 at 9:55 AM
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The shares of buzzed-about work-from-home staple Zoom Video Communications Inc (NASDAQ:ZM) are up 0.8% this morning to trade at $209.44, after posting earnings and revenue for the first quarter that topped analysts' expectations. The company nearly doubled its annual sales forecast, too, blowing Wall Street's estimates out of the water, though it did warn that its gross margins would likely stay below historical norms, adding that its costs were rising sharply. 

In response, no less than six analysts raised their price targets on ZM, the highest coming from RBC, which hiked it to $250 from $125. The analyst also upgraded the stock to "outperform" from "sector perform." There's still plenty of room for more bull notes, too. Coming into today, just six in coverage considered Zoom a "buy" or better, compared to 11 saying "hold." Plus, the consensus 12-month price target sat at $160.83 -- a 22.7% discount to last night's close. 

This is surprising, considering the stock's recent price action. Several pullbacks since early this year were deftly captured by the 50-day moving average, with this most recent run-in launching the stock to four straight daily wins, and three consecutive closing highs. For the year, ZM is up more than 200%. 

There's still plenty of pessimism among options traders, too. This is per ZM's 10-day put/call ratio of 0.99 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 86th percentile of its annual range. This implies that while calls and puts are running at roughly the same clip, the appetite for bearish bets has been much larger than usual of late. 


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