What happened
Zoom Video Communications (ZM 1.57%) rallied on Thursday following positive analyst remarks. As of 12:20 p.m. EDT, the cloud software company's stock price was up nearly 3%.
So what
Morgan Stanley analyst Meta Marshall raised her rating on Zoom's shares from equal weight to overweight. Marshall now expects Zoom's stock price to rise to $400, up from her prior forecast of $360. If she's correct, shareholders could enjoy gains of roughly 15% from the stock's current price near $347.
Zoom Video Communications' shares are a buy, according to Morgan Stanley's analyst. Image source: Getty Images.
Marshall believes investors have become too bearish on Zoom's near-term growth prospects. She expects Zoom to continue to win new corporate customers even as employees return to their offices. Marshall also posits that the company's upcoming Zoomtopia conference in mid-September, when Zoom announces its platform's latest updates, will be another positive catalyst.
Finally, Marshall argues that investors will realize Zoom's current stock price is a bargain after management issues its financial guidance for fiscal 2023 later this year.
Now what
The trend toward distributed workforces is unlikely to end even after the COVID-19 crisis eventually subsides. Zoom's technology is helping to enable this global trend, providing efficiency and cost-saving benefits to both employers and employees along the way. Thus, investors who have come to expect a post-pandemic falloff in Zoom's sales might have adopted an overly bearish view. Marshall's more bullish perspective is likely more appropriate, and her $400 price target may even prove conservative.
