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Zoom Crushes 4Q Estimates As Revenue And Profit Soar; Shares Trend Higher

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Zoom Video Communications delivered a stellar 4Q performance as the structural shift toward work-from-anywhere amid the COVID-19 pandemic drove strong demand for its platform.

Furthermore, the video-telephony and online chat services provider issued better-than-expected guidance for 1Q and FY22. This drove the stock 8.4% higher during the extended trading session after closing 9.7% higher on Monday.

Zoom's (ZM) adjusted earnings of $1.22 per share jumped 713.3% year-over-year and handily surpassed analysts’ expectations of $0.79. Revenues of $882.5 million beat the Street’s estimates of $811 million and increased 369% from the year-ago quarter.

The robust 4Q performance reflects the benefits from the strong demand for communications and collaboration tools and services amid the COVID-19 pandemic-led work-from-home trend.

Zoom expects its 1Q revenues to be in the range of $900-$905 million, higher than analysts' estimates of $835.4 million. Moreover, it expects to report adjusted EPS in the range of $0.95-$0.97, also higher than the Street's estimates of $0.70. (See Zoom stock analysis on TipRanks)

As for FY22, Zoom forecasts revenues to be between $3.76 billion and $3.78 billion. Meanwhile, it projects its adjusted earnings to be in the $3.59-$3.65 per share range. Analysts are expecting the company to report revenues and earnings of $3.50 billion and $2.96 per share, respectively.

Following the earnings release, Rosenblatt Securities analyst Ryan Koontz raised the stock’s price target to $400 (2.4% downside potential) from $350 and reiterated a Hold rating.

In a note to investors, Koontz wrote, “Though we are thoroughly impressed with ZM execution to date and recognize that WFH and hybrid models are likely to remain post-pandemic, we believe it is critical to monitor company progress in building enterprise direct and channel sales while its brand and lead market position are most valuable.”

Zoom has a Moderate Buy analyst consensus rating based on 6 Buys and 6 Holds. The average analyst price target of $488.64 implies upside potential of about 19.3% to current levels. That’s after shares have skyrocketed over 290% over the past year.

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