Zoom shares slip as analysts assess company's sales outlook
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Zoom Video Communications (NASDAQ:ZM) shares slipped by 1.5% in pre-market trading, Tuesday, as analysts weighed in on the company's fourth-quarter results and slightly disappointing sales outlook.
On Monday, Zoom (ZM) reported a fourth-quarter profit, excluding one-time items, of $1.29 a share, on $1.07 billion in revenue. Analysts had earlier forecast Zoom (ZM) to earn $1.07 a share, on sales of $1.05 billion.
However, Zoom (ZM) also said that for its fiscal first quarter it expects to earn between 86 cents and 88 cents a share, excluding one-time items, on revenue between $1.07 billion and $1.075 billion. That sales outlook fell shy of analysts earlier forecasts for $1.1 billion in first-quarter revenue.
Zoom (ZM) also said it expects full-year sales to be between $4.53 billion and $4.55 billion, while Wall Street was looking for revenue of $4.75 billion.
That outlook led Citi analyst Tyler Radke to cut his price target on Zoom's (ZM) stock to $139 a share from $147. Radke left his neutral rating on Zoom's (ZM) stock unchanged, saying that the company's revenue forecast could have been worse, and that the company suggested that sales should pick up in the second half of this year.
"We expect some investors will view guidance as aggressive, given the diminishing levels of upside [against guidance], and the improvement in [customer] churn [and] enterprise demand seemingly baked in," Radke said.
In addition, Radke noted that Zoom's fourth quarter had the "smallest level of revenue upside seen to date" and there were some customer metrics that showed signs of pressure and declines quarter-over-quarter. 
Zoom also said it is reclassifying its customer-reporting segments in future revenue reports. Radke said the purpose of that move is to better delineate sales made through Zoom's (ZM) partner and those from its self-service operations.
Radke said that doing this "could help increase confidence in the sustainability of Zoom's (ZM) primary growth driver, and suggests that the segment with higher churn risk could be larger.
At Morgan Stanley, analyst Meta Marshall was more positive about Zoom (ZM) saying that "the platform Zoom has built can generate double-digit growth for multiple years," as new product usages grows.
Marshall, who maintained an overweight rating and $165-a-share price target on Zoom's (ZM) stock said that the company's lower-than-expected sales outlook actually "provides a path" to beating estimates this year, while also instilling a sense of confidence that Zoom (ZM) can grow sales by double-digit percentage rates "through monetizing [its] installed base with additional products.
In January, Morgan Stanley said Zoom's position was under-appreciated by the market and growing interest in Microsoft Teams wasn't leading to cancellations.