For Zoom, Piper says 'know when to fold them' with new rating cut
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Piper Sandler analyst James Fish must have had legendary country music singer Kenny Rogers on his mind, Thursday, when he cut his rating on Zoom Video Communications (NASDAQ:ZM).
Fish quoted from Rogers' seminal hit "The Gambler", when he said "got to know when to fold them", and took down his view on Zoom (ZM) to neutral from overweight. Fish also sliced his price target on Zoom's (ZM) stock by almost 40%, to $96 a share from $157.
"We are admittedly late and at risk of calling a bottom" to Zoom's (ZM) share price, Fish said, in a research note. Fish said that among the reasons for his downgrade of Zoom (ZM) were limited potential gains from services such as paid video and Zoom Phone, as well as "too much commercial [and] small-and-medium business exposure.
Zoom (ZM) closed Thursday with a gain of just 0.2%.
Fish estimates that Zoom's (ZM) core video "is mature", with between 80% and 90% of the company's revenue coming from video meetings, and its management believes it will be able to boost video usage through international expansion efforts. However, Fish said that Zoom (ZM) will need to do more to get back into the good graces of investors who have shaved almost 80% off of the company's share value since the stock hit a 52-week-high of $406.48 on July 7, 2021.
"The 'If you haven't used Zoom already by now ' mantra is more realistic and an overhang to the stock," Fish said.
Earlier Thursday, Zoom (ZM) agreed to acquire artificial intelligence platform company Solvvy as part of its efforts to expand into contact centers used to solve customer resolution matters.
Zoom (ZM) has been featured in a recent analysis, by SA's Steven Cress, which states that "with the changing landscape and people back in the office, the future outlook for a number of tech darlings is bleak."