What happened
Shares of Zoom Video Communications (ZM +2.08%) rose by almost 6% on Thursday, nearly quadruple the percentage rise of the S&P 500 on the day. One analyst update in particular seems to be responsible for that encouraging performance.
So what
As is typical for a high-profile stock in the run-up to its latest earnings release, analysts have been tweaking and/or reiterating their evaluations of Zoom. One prognosticator in particular had glowing words for the company on Thursday.
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Morgan Stanley's Meta Marshall reiterated an overweight (buy) recommendation on the stock with a $165 price target, implying a nearly 30% upside on the latest closing price.
Marshall wrote in a research note that "We remain [overweight on Zoom] because we believe the market is fundamentally undervaluing [Zoom]'s growth potential as they leverage their installed base, instead dismissing it as a [work-from-home] winner."
The analyst added that Zoom also "remains one of the more profitable software companies out there," trading around 30 times expected 2022 free cash flow.
NASDAQ: ZM
Key Data Points
Now what
It should be noted that Marshall was a bit of an outlier among Zoom analysts on Thursday, although his opinion seemed to be the one investors were taking to heart. Two others -- UBS's Taylor McGinnis, and Walter Pritchard of Citigroup -- both significantly cut their price targets on the stock. McGinnis' new level is $130 (previously $250), while Pritchard's now stands at $147 from the former $250. Both prognosticators are maintaining their neutral recommendations.
Zoom is slated to host a webinar (on its video platform, naturally) to discuss its fourth-quarter 2021 earnings this coming Monday, Feb. 28, at 5 p.m. ET.
