Rosenblatt starts Zoom Video (ZM) at Neutral, sees better opportunities elsewhere

Rosenblatt Securities analyst Catharine Trebnick initiated research coverage on Zoom Video Communications (NASDAQ: ZM) at Neutral with a price target of $75 per share, which implies an upside potential of less than 10%.

“The stock is currently trading at 3.5x our FY24 revenue estimate of $4.5B. We believe this to be a fair valuation as the company growth profile of 1.6% Y/Y falls below the 16% average of its peer group. We believe the multiple is unchanged with revenue growth rate 4.4% Y/Y in FY25,” Trebnick wrote in the initiation note.

The analyst could get more positive on ZM stock when “revenue contribution, retention levels, international contribution and growth of its cohort solutions.”

While Trebnick opted to stay on the sidelines for ZM, she is more positive on Five9 (NASDAQ: FIVN), RingCentral (NYSE: RNG), and 8x8 (NASDAQ: EGHT).

On FIVN, the analyst wrote:

“We believe the stock deserves to be re-rated at least halfway back to its pre-pandemic range of 10x-12x. This new level would be supported by better growth, profitability and increased exposure to AI/Automation to its product profile and expanding its market reach upmarket and internationally.”

By Senad Karaahmetovic

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