Few companies have accidentally benefited from the COVID-19 pandemic like pandemic Zoom video communication (NASDAQ: ZM).
The video conferencing specialist became a household name seemingly overnight as the crisis forced people to switch to remote working and learning. As a result of the skyrocketing exposure that resulted in outstanding growth, the stock rose nearly 400% in 2020.
Expectations for future growth remain high, with the stock currently trading at 133.6 times earnings. The stock is currently trading at around $ 387, well below its all-time high of nearly $ 589.
Wall Street analysts’ price targets range from $ 242 to $ 525, while the average valuation estimate is $ 401.84.
Zoom video communication (NASDAQ: ZM)
Price: $ 388.89 (as of July 2, 2021)
Market capitalization: 114,584,796,217
Zoom share forecast 2021
Note that Zoom’s fiscal years do not exactly coincide with the calendar years. The company’s fiscal year 2021 was only closed at the end of January; fiscal year 2022 is currently running. The following estimates relate to fiscal years.
Zoom’s revenue rose 326% to $ 2.65 billion in fiscal 2021, with large companies a key growth driver. The number of customers with TTM revenue of over USD 100,000 in the past 12 months rose 156% to 1,644 at the end of the last fiscal year. This key figure climbed again to 1,999 in the first quarter of the financial year.
Importantly, many companies have now recognized the benefits of remote working and hybrid models and are not returning to pre-pandemic behaviors. The pandemic has ushered in a new productivity paradigm that will involve Zoom’s services in the long run.
Thanks to the strong momentum, Zoom recently raised its annual forecast for the 2022 financial year (comparable to the 2021 calendar). The company now expects revenue for this fiscal year to be in the range of $ 3.98 to $ 3.99 billion, up from the previously forecast range of $ 3.76 to $ 3.78 billion. Adjusted earnings per share (EPS) should be $ 4.56 to $ 4.61.
Wall Street is looking for more, with the consensus estimate for adjusted EPS currently at $ 4.68. Zoom shares trade at 83.1 times its estimated EPS for fiscal year 2022.
Zoom share forecast 2025
Wall Street expects the run of Zoom to continue, with sales expected to hit $ 9 billion by fiscal 2026.
Here are the sales analysts they model for.
|2022||$ 4 billion||51%|
|2023||$ 4.79 billion||20%|
|2024||$ 5.62 billion||17%|
|2025||$ 7.31 billion||30%|
|2026||$ 8.78 billion||20%|
On the bottom line, adjusted earnings per share are projected to more than double from fiscal 2021’s level of $ 3.34.
|year||Adjusted EPS||Year-on-year growth|
Zoom began enjoying significant operational leverage in 2020 that skyrocketed profits while still providing the company with plenty of cash to invest in its technology. This leverage will continue if Zoom can stay on course.
Choose like a pro
Where can you invest $ 500 now?
Before you buy Amazon, Netflix, or Apple, here are some things to consider …
The Motley Fool team was the first to recommend each of these stocks more than a dozen years ago!
- They discovered Netflix for $ 1.85 a share, back in the days of DVDs in the mail.
- And recommended Amazon for $ 15.31 in 2002, before most people were familiar with using credit cards online.
- And even hit Apple at $ 4.97 per share, about a month before the very first iPhone was released.
Look at where these stocks are today. Bottom line: Investing $ 500 in all three of these stocks would be worth more than $ 200,000 today!
And that’s why this matters: The Motley Fool’s flagship investment service Stock advisor just announced their top 10 “best buys” around the world entire exchange. Whether you’re starting with $ 100, $ 500, or more, you’ll want to know all the details!
Click here to learn more
Zoom share forecast 2030
As always, long-term forecasts are associated with greater uncertainty because the future is difficult to predict. This is especially true in technology, where things can change in the blink of an eye. That being said, Wall Street models can still be useful in determining investor expectations.
Analysts estimate that Zoom could generate nearly $ 20 billion in revenue in fiscal year 2031.
|2027||$ 10.44 billion||19%|
|2028||$ 12.32 billion||18%|
|2029||$ 14.42 billion||17%|
|2030||$ 16.72 billion||16%|
|2031||$ 19.23 billion||fifteen%|
The growth in sales will lead to increasing profits.
|year||Adjusted EPS||Year-on-year growth|
Zoom bullet case
Even though Zoom has had a year of astronomical growth due to the pandemic, there are plenty of upside opportunities for the company.
Zoom hopes to disrupt traditional conference call solutions, including older hardware phones. The company has just launched Zoom Phone Appliances and is working with dominant enterprise vendors like Poly (NYSE: POLY), formerly known as Plantronics, to incorporate Zoom directly into desk phones.
The company has also launched a virtual events platform, acquired conference rooms with Zoom Rooms, and worked with many consumer-facing companies to make Zoom available on video calling devices.
In addition, Zoom has worked diligently to improve security with end-to-end encryption after high profile “zoom bombing” cases where uninvited users joined Zoom calls to share inappropriate content.
International growth is still in its infancy, with international markets playing an increasingly important role in expanding sales.
Zoom bear suitcase
As is often the case when a company is wildly successful, that success attracts competition. Existing video conferencing giants for businesses like Cisco (NASDAQ: CSCO) is likely to respond to the Zoom threat with new space defense offers.
Zoom CEO Eric Yuan left Cisco to turn the video conferencing market upside down, and the CEO has clearly made a name for himself.
Bigger tech giants – including alphabet (NASDAQ: Demokratie) (NASDAQ: Demokratie) Subsidiary Google, Facebook (NASDAQ: FB), Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) – have started investing aggressively in video telephony platforms, both for consumer-facing applications and within the enterprise.
Increased competition could hurt Zoom’s user growth and / or diminish the company’s pricing power, especially as tech giants can often afford to undercut because they have myriad other stores while Zoom is a video conferencing game.