ZoomInfo (ZI) Gains After Setting $2 Billion 2025 Sales Target, Analysts Positive

June 15, 2021 8:43 AM EDT
Get Alerts ZI Hot Sheet
Price: $53.84 +0.77%

Rating Summary:
    16 Buy, 3 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 18 | Down: 12 | New: 23
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Shares of ZoomInfo (NASDAQ: ZI) are up 1.5% in the pre-open trading session Tuesday following an Analyst Day event organized by the tech company yesterday.

Among other things, ZI set a $2 billion in sales target by 2025, suggesting a 2020-2025 growth CAGR of 33%.

For BofA analyst Koji Ikeda, this projection was a highlight of the event. Ikeda says that this target “suggests the business delivering durable, above software industry revenue growth (i.e., mid-20s) for the medium-term.”

Other takeaways include:

1) the value proposition, 2) the go-to-market strategy, 3) new products such as recruiting, 4) the Insent acquisition (conversational chat marketing), and 5) expanding partnerships and integrations (Snowflake).

“Management also gave an update on its go-to-market strategy, which includes increasing sales capacity and investments into the enterprise and international sales motions, which are still relatively early and could drive potential upside to future revenue as the strategies scale. Lastly, management now estimates its TAM to be $52bn (+117%), which is up from $24bn at IPO, driven by expansion in core intelligence to $26bn (from $24bn), and the addition of Engage (+$7bn), data management, (+$6bn), chat (+$7bn), and recruiting (+$6bn),” the analyst said in a note sent to clients.

Ikeda reiterated a “Buy” rating and a $70.00 per share price target on ZI as he believes the company has established itself as a next-generation customer engagement platform.

Moreover, ZoomInfo has “successfully added multiple growth levers to the platform with new products (organically and inorganically) that should enable the business to grow at an above average growth profile over the next five years.”

“While the business will likely be acquisitive in the future, the M&A strategy should remain consistent with past practice, and management has a good track record of integrating acquisitions, we think. We believe ZoomInfo’s growth/profitability profile is best-in-software-class (Rule-of- 80+), and appears sustainable, which can act as a solid anchor for LT investors.”

Morgan Stanley analyst Stan Zlotsky is also bullish on the company in the aftermath of Analyst Day as he notes that a new sales target “underscores a best-in-class asset that not only can drive durable topline growth, but also can generate meaningful FCF, a rare combination in software.”

The analyst has an “Overweight” rating and a $75.00 per share price target on ZI.

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