Zoom rises on Daiwa upgrade, firm cites recent pullback as 'good entry point'
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Zoom Video Communications (NASDAQ:ZM) shares rose on Tuesday after investment firm Daiwa upgraded the communications software company, noting that the recent decline in shares has provided a "good entry point."
Analyst Stephen Bersey raised the rating on Zoom (ZM) to outperform from underperform and boosted the price target to $121 from $107, noting that the company's recent earnings report showed "solid execution" and there is slightly more positive belief the company's core business is stabilizing. 
In addition, Bersey noted that Zoom's (ZM) guidance "is likely to calm investor concerns about the potential for further top-line deceleration," while also pointing out that the focus on other businesses, such as Zoom Phone and Contact Center could be rethought.
Zoom (ZM) shares rose nearly 2% to $113.40 in premarket trading on Tuesday.
"For [first-quarter 2023] , we favorably view both the quarterâs performance and company guidance and think the recent market pullback offers an attractive entry price for the stock," Bersey wrote, adding that Daiwa was "impressed" with Zoom's (ZM) progress on enterprise accounts. 
Looking ahead, Bersey expects Zoom (ZM) to grow revenues 11.5% in fiscal 2023 to more than $4.5B and adjusted earnings of $3.73 per share. In fiscal 2024, revenue is expected to rise 17.1% to $5.35B, with adjusted earnings likely to be $3.90 per share. 
"Strategically, we think investors should focus on the companyâs core business as we believe that [Zoom's] valuation is highly dependent on its core business performance," Bersey explained. 
Prior to earnings, investment firm Piper Sandler lowered its price target on Zoom (ZM) shares by almost 40%, while downgrading the stock to neutral from overweight.
Analysts have been overly bullish on Zoom's stock (ZM). It had an average rating of Buy from Wall Street analysts, and a less enthusiastic
HOLD from Seeking Alpha authors. Conversely, Seeking Alpha's quant system, which consistently beats the market, rated Zoom a STRONG SELL.