Zoom Video Communications (NASDAQ: ZM) fell during the market open on May 16 as Citi (NYSE: C) reduced its price target for the company to $118.
Competition with Microsoft’s (NASDAQ: MSFT) Teams was cited as a competitive headwind with potentially ‘modest upside’ seen for ZM going forward as noted by analyst Tyler Radke.
Shares of Zoom are currently down 4.08% during the early part of the trading session.
Sour expectations
On May 12, Piper Sandler’s analyst James Fish had also downgraded Zoom shares, citing that the company may have ‘limited upside’ adding that they don’t see gains for paid video and Zoom phone services.
In comparison with Teams, which is pushed through Office 365 services, ZM seems to lack the potential for upselling, conceivably leading to reduced earning possibility in the future. Analysts expect the company to have $1.07 billion in sales and to earn 88 cents per share.
ZM chart and analysis
Shares of the company have been in an almost constant decline since August of 2021, creating a downward momentum. Whatsmore, shares are bouncing below all daily Simple Moving Averages on steady volume throughout May.
On Wall Street, analysts give the stock a moderate buy rating predicting that for the next 12 months, the average price could reach $153.59 a potential 68.89% upside from the current trading price of $90.94.
Zoom burst onto the scene during the pandemic lockdowns when shares of the company reached a head-spinning $559. Currently, the price is well below those numbers and since no dividend is offered investors can rely solely on price appreciation.
Competition in the field of online video communication has intensified as more companies realized that remote work will probably stay with us for longer. However, the monetization aspect of the entire process will probably remain a challenge for companies not offering additional accompanying services like Microsoft is doing.
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