What happened
Shares of Zoom Video Communications (ZM 1.34%) 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.
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.
