The pandemic darling Zoom (NASDAQ: ZM) stock price crashed as investors have started dumping internet stocks after Pfizer (NYSE: PFE) announced that its coronavirus vaccine has more than 90% effectiveness.
Shares of video communication company are now down almost 30% from the 52-weeks high of $588 that it had hit last month. Meanwhile, some value investors believe the massive share price drop is presenting a buying opportunity for long-term investors. Zoom stock price is currently trading at around $380.
Zoom can prevail even after pandemic
Zoom is a video communication tool that has gained user’s confidence after the pandemic has forced people to work from home.
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However, Mizuho Securities analyst Siti Panigrahi believes Zoom has the potential to sustain growth trends even if the pandemic ends. This is because it has now turned into a critical component for business communication.
The analyst has also highlighted the confidence in its licensed based business model (not usage-based) that offers downside protection. The firm has provided a price target of $550 for Zoom stock.
Financial Outlook is backing Zoom stock
Zoom has generated almost 355% revenue growth in the latest quarter while operating income jumped to $188 million from $2 million in the year-ago period.
The company expects December quarter revenue in the range of $685M-$690M. For the full year, the revenue guidance stands around $2.37B-$2.39B, representing 281%-284% growth from last year.
The market analysts are bullish over Zoom’s strategy of adding more products to the portfolio. Bernstein has provided a price target of $650 for Zoom stock, citing a huge runway to grow penetration and revenue.
Its analyst Chrane claims Zoom phone adoption has only hit 1% of the potential user base, with expectations that phone adoption would add billions of dollars to its revenue base in years ahead. The analyst expects $1.6 billion in recurring revenue next year.