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Is there still room to ZOOM (ZM)?

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Zoom Video Communications Inc (ZM)

Much like “Ouma Rusks”, a Zoom Video call has become a household name during the COVID-19 pandemic which has seen the stock gain over 690% YTD.

But is there still room for the communications technology company’s share price to go even higher? If you consider the factors that drove the share price higher in the first place and that COVID-19 infections are increasing which could see work-from-home make its return, then yes.

Click to view Zoom Video Communications Inc (ZM) shares
on EasyEquities

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Fundamentals

Zoom Video Communications Inc made its “unicorn” IPO debut in 2019 with much fanfare which continued after usage of the software picked up globally in early 2020 as COVID-19 quarantine measures were introduced.

Second-quarter earnings impressed and exceeded expectations which saw revenues quadruple from the prior year. Revenue increased 355% year-over-year to $663.5 million while operating income rose to $188 million. Earnings per share beat estimates by $0.47 with net cash from operations up to $31 million from a year ago.

Zoom Video Communications Inc (ZM) share overview:

  • Sector: Information Technology
  • Market Cap of $153.30 billion.
  • Price/Earnings (LTM): 204.5x
  • Price/Book: 127.8x
  • Next Earnings: 1st of December 2020
  • 52 Week Range low of $62.49 and $568.34 per share high.

Outlook – Zoom's forward earnings guidance for Q3 and a full year has been revised higher and is set for another beat in estimates with EPS expected to more than double from the consensus.

Competition in this sector is starting to heat up especially if you look at Microsoft’s latest earnings release which showed that its Microsoft Teams offering saw a user increase of 53% since April 2020.

The video first communications platform has also recently released Free End-to-End Encryption which should put IT security complaints to rest just in time as the pandemic infections pick up.

Chart Life

Zoom’s price action is in a steady uptrend since breaking out of the base formation in late February 2020 and reached new all-time highs in October. The share price has gained over 692% YTD and might continue in this fashion if fundamental and global pandemic factors playout.

Short interest as a percentage of outstanding shares on Zoom Video Communications Inc (ZM) is currently 0% which supports a positive outlook. The median analyst expectations for Zoom are $460.83 per share (red line).

ZoomChart

Portfolio particulars

  • Portfolio Hold (Current)*
  • Portfolio Buy opportunity: above $458.00 per share **
  • WhatsTheBeef long term target price: $655.00 per share.

Click to view Zoom Video Communications Inc (ZM) shares
on EasyEquities

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Informed decisions

With the coronavirus pandemic infections gaining momentum globally, we might see the return of the "work-from-home" initiative as lockdown measures intensify in Europe and the U.S.

This could mean that Zoom could be an attractive prospect for new EasyVestors considering investing in the stock, especially if history repeats itself.

New to investing

and want to know more about about Information Technology stocks?

Read: Chasing the Sun (FSLR)


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Sources – EasyResearch, Zoom Video Communications Inc, Yahoo finance, Koyfin, SeekingAlpha, MarketBeat, Wikipedia.

Take note: stock data was taken on 28/10/2020 during the U.S market open. 

*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio before the U.S. market open.

**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behavior would support the outlook and Close above refers to a share price close above a Technical Resistance level.

Follow Barry Dumas
@BEEF_FINMARKETS

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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table

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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) and GT247.com do not warrant the correctness, accuracy, timeliness, reliability or completeness of any information received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities and GT247.com (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.The value of a financial product can go down, as well as up, due to changes in the value of the underlying investments. An investor may not recoup the full amount invested. Past performance is not necessarily an indication of future performance. These products are not guaranteed. Examples and/or graphs are for illustrative purposes only.