Zoom: Work from Home is Here to Stay, But This Analyst Says Hold Off


More by accident than design, Zoom (ZM) has perfectly captured the zeitgeist in 2020. Far from a household name before the coronavirus struck, the viral outbreak has catapulted the video conferencing platform into millions of living rooms, studies, and home offices around the world. Not to mention investors have reaped hefty rewards with the platform’s rise in popularity (the stock is up 285% year-to-date).

While Zoom has become the public’s remote communication tool of choice, not all users and employees – spread out across all demographics of society – are tech savvy enough to set up the equipment and software needed to make use of the platform. To address this issue, Zoom has partnered with video-conferencing appliance maker DTEN to create a large tablet-like touchscreen device with Zoom software already set up, with it virtually ready to go when unpacked from the box. The Zoom For Home — DTEN ME, which will go on sale in August, will cost $599 and feature a 27″ display, three wide-angle cameras, and eight microphones.

BTIG analyst Matt VanVliet adds the new product to a list of positive developments set to benefit Zoom over the mid-term. These include “ongoing billings momentum in late CY20 driving revenue and profits higher in FY22 (basically CY21),” the company’s swift reaction to previous security breaches and the rising WFH (work from home) secular trend in which Zoom is already a major player.

To sum it all up, VanVliet said, “Zoom’s ability to rapidly remove any friction with adoption and capitalize on the widespread realization of a new normal blending virtual and in-person work presents a massive opportunity for Zoom and UCaaS providers more broadly, in our view. And by partnering with hardware producers rather than owning it, keeps the device-agnostic approach that has proven very successful.”

Nonetheless, Zoom’s rapid ascent and lofty valuation keep VanVliet on the sidelines with a Neutral (i.e. Hold) rating. (To watch VanVliet’s track record, click here)

Among VanVliet’s colleagues, Zoom gets mixed reviews. The analyst consensus rates Zoom a Moderate Buy based on 11 Buys, 8 Holds and 2 Sells. However, the average price target hits $228.35 and implies shares could drop by 13% over the following months. (See Zoom stock analysis on TipRanks)

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