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Why Zoom Video Stock Popped 6% Ahead of Earnings

By Rich Smith – Updated Aug 20, 2020 at 1:45PM

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Most analysts think second-quarter sales will more than triple. This analyst thinks that's conservative.

What happened

Shares of videoconferencing star Zoom Video Communications (ZM -4.03%) are -- what else? -- zooming higher in Thursday trading, up 5.8% as of 1:25 p.m. EDT.

You can thank Morgan Stanley for that.

Stock up arrow rising over 2020

Image source: Getty Images.

So what

This morning, the investment banker raised its price target on Zoom stock more than 25%, to $240 a share, reports TheFly.com.

Heading into second-quarter earnings, analysts on average are forecasting a huge surge in profitability for the tech stock -- $0.45 per share, on sales of more than $500 million, which would be more than triple last year's Q2 revenue take. Impressive as those numbers sound, though, Morgan Stanley predicts that Zoom will deliver a "meaningful beat" on both counts, and show improvement in long-term contracts with its customers to boot.

Now what

Is Morgan Stanley right about the earnings beat -- or are all the other analysts, who disagree with MS, correct? We'll find out soon.

Zoom Video is scheduled to report Q2 earnings after the close of trading on Monday, Aug. 31.  

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

Stocks Mentioned

Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$74.31 (-4.03%) $-3.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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