Zoom rises as Benchmark upgrades to buy, sees 30% upside
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Zoom Video Communications (NASDAQ:ZM) shares rose early Tuesday after investment firm Benchmark upgraded the stock, noting it still has room to grow, even if it's at a lower level.
Analyst Matthew Harrigan raised his rating to buy from hold and put a "conservative" $124 price target, implying some 30% from current levels, noting that revenue is only likely to grow roughly 11% in fiscal 2023, considerably less than Zoom has grown in the past. 
"We are admittedly surprised by the opportunity to upgrade Zoomâs stock at its current level as we have high regard for management, especially CEO Eric Yuan, and feel that the current price attaches nil credibility to Zoom realizing platform âhappinessâ ambitions," Harrigan wrote in a note to clients.
Zoom (ZM) shares rose more than 3% to $97.91 in mid-day trading on Tuesday
In addition, Harrigan noted that since the market is currently averse to paying up for long-term growth, Zoom still has a roughly 4.5% free cash flow yield for 2023 and has three growth pillars going for it, including its unified communications platform, including Zoom Meetings, Phones, Rooms and Events.
It also has the shift to hybrid work and the change in workflow as the future of work changes following the pandemic, integrating other platforms such as DocuSign (NASDAQ:DOCU), ServiceNow (NYSE:NOW) and Asana (NYSE:ASAN). 
In addition, Zoom (ZM) could see increased spending, as less than 20% of the Global 2000 are spending more than $100,000 on Zoom. 
"Management remains especially confident on winning share as sales patterns normalize for proof of concept and RFPs," Harrigan explained. 
In January, Morgan Stanley said Zoom's (ZM) position was under-appreciated by the market and growing interest in Microsoft Teams wasn't leading to cancellations.