Zoom Stock Climbs Amid Slew of Post-Earnings Bull Notes

Year-over-year, the security is already up over 277%

Digital Content Manager
Mar 2, 2021 at 10:29 AM
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The shares of Zoom Video Communications Inc (NASDAQ:ZM) are on the rise, up 3.1% at $422.47 this morning, after the video-conferencing name posted better-than-expected fourth-quarter earnings, in addition to a revenue beat. The company also announced an upbeat current-quarter forecast, noting it expects millions of people to continue using the platform to work remotely and attend online classes. In response, the security earned an upgrade from Piper Sandler to "overweight" from "neutral," as well as five price-target hikes, including an impressive one from Rosenblatt Securities to $400 from $350.

Digging deeper, Zoom stock has pulled back from its Oct. 19, all-time high of $588.84. Shares dipped below the once-supportive 60-day moving average in November, only to briefly conquer the trendline in early February. Today's pop has the equity attempting to consolidate above that level once again, despite overhead pressure at the $440 mark. Year-over-year, ZM sports a 277.8% lead.

Analysts were mostly hesitant towards the security coming into today, leaving plenty of room for additional upgrades going forward. Of the 20 analysts in question, 11 carried a tepid "hold" or worse rating. However, ZM's 12-month consensus target price of $483.79 is a 13.2% premium to current levels.

There is plenty of pessimism left to be unwound among short sellers, which could push the security even higher. While short interest shaved 10.7% in the most recent reporting period, the 6.42 million share sold short still account for a whopping 20% of the stock's available float.

Meanwhile, the options pits are firmly in the bullish camp. This is per Zoom stock's 50-day call/put volume ratio of 2.08 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 89% of readings from the past year. This means call are being picked up at a faster-than-usual clip.

Today's pop is only reinforcing that optimism. So far, 32,000 calls have already crossed the tape, which is four times what is typically seen at this point. Most popular is the 3/5 455-strike call, followed by the 450-strke call in the same weekly series, with positions currently being opened at both. Buyers of these options expect more upside for ZM by the end of the week, when these contracts expire.

The even better news for options traders is that the security's Schaeffer's Volatility Scorecard (SVS) sits all the way up at 81 out of 100. In other words, this means the stock has greatly exceeded option traders' volatility expectations during the past year.

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