Zoom Stock Price Forecast December 2021 – Time to Buy ZM Stock?

Zoom Video Communication (NYSE: ZM) stock rose 9.5% on Friday and was in the green in the premarket price action today. The stock has recovered 14% from its 52-week lows even as it trades at less than half of its 52-week highs.

ZM stock is down 40% so far in 2021. There has been a sell-off in all the stay-at-home stocks as investors instead pivoted towards cyclical and reopening stocks. However, stay-at-home stocks have been in focus after the emergence of the omicron variant. What’s the forecast for Zoom stock and is it a good buy for 2022?

Zoom stock technical analysis

Zoom stock is trading below most moving averages like the 50-day, 100-day, and 200-day SMA. The 50-day SMA has been a key resistance level for the stock. However, its 12,26 MACD (moving average convergence divergence) gives a buy signal while the 14-day RSI (relative strength index) is a neutral indicator.

After being in a downwards price channel, ZM stock is looking at a breakout. Considering the positive sentiments towards stay-at-home stocks, we could see some upwards momentum in Zoom also.

68% of all retail investor accounts lose money when trading CFDs with this provider.

Zoom stock latest news

Last month, Zoom released its fiscal third-quarter 2022 earnings for the three-month period ended October. The company’s earnings and guidance were better than expected, still, the stock tumbled after the earnings release. Markets have been concerned about the company’s slowing growth. Its forecasted topline growth in the fourth quarter is only 18.4% which is a fraction of the over 300% annual growth that it reported last year. Also, it would be the slowest growth for Zoom since it went public.

Zoom founder and CEO, Eric S. Yuan meanwhile sounded upbeat on the company’s outlook. He said “We are well on our way to becoming an indispensable platform for enterprises, individuals, and developers to connect, collaborate, and build in the flexible hybrid world of work. We believe our global brand, innovative technologies, and large customer base position us well for the future.”

Delayed office reopening is positive for ZM stock

The company is looking to add more services that would diversify its revenue base. Notably, while several analysts see the reopening of offices as a negative for Zoom, Rishi Jaluria of RBC has a contrarian view. He believes that we are headed for a hybrid model where some employees work from home while others continue to work from home. He also sees companies replacing their legacy videoconferencing providers with Zoom.

Meanwhile, ZM stock has seen upwards momentum amid the fast spread of the omicron variant. Several companies including the Big Tech giants like Apple and Google have delayed the reopening of offices amid concerns over the omicron variant. While the medical community is still studying the virus, initial reports suggest that the current vaccines are not as effective against omicron as they were against the previous variants. This has led to a rise in stay-at-home stocks like Zoom while reopening plays have tumbled.

Zoom stock forecast

Zoom believes that the hybrid work model would drive its growth even after the COVID-19 pandemic. “I think there are three big shifts that are happening post-pandemic that businesses are investing in and that’s spurring our growth and relevance,” said Ricky Kapur, head of Asia Pacific at Zoom. He listed the collaborative and hybrid work environment as the first key driver for the company.

According to Kapur, as companies reimagine customer engagement, it would drive demand for Zoom. “Whether it’s a retail experience, the ability to live feed into the store and speak with a live person — see a product, have a real conversation, and then make a purchase decision. Consumers are expecting that from companies,” said Kapur speaking with CNBC. He sees companies building innovative platforms in areas like healthcare and education as the third key driver for Zoom going forward.

ZM stock target price

Zoom has a median target price of $277.50 which is an almost 39% premium over its yesterday’s closing prices. Its highest target price is $572 which is a premium of 186% while the lowest target price of $200 is similar to current prices. Wall Street opinion is divided over the stock though and of the 31 analysts covering the stock, 15 rate them as a buy while 15 rates them as a hold. One analyst has a sell rating on the stock.

Meanwhile, not all analysts are bullish on ZM stock. Earlier this month, Goldman Sachs initiated coverage on the stock with a neutral rating while Wells Fargo lowered the stock’s target price from $245 to $200. After the company’s fiscal third-quarter earnings also, several brokerages including Bank of America, BTIG Research, Wolfe, and Evercore ISI had lowered their target prices.

Zoom stock long term forecast

The long-term forecast for Zoom looks positive considering the fact that the company’s services have become an indispensable part of our lives. Earlier this year, JPMorgan’s Sterling Auty issued a bullish note on ZM titled “Enough is Enough” and termed the stock’s risk-reward as attractive. Auty is bullish on Zoom’s long-term forecast and said “The pandemic has likely permanently altered employee behavior to be much more comfortable with video collaboration first as a method of communication rather than a desktop phone. We see large enterprises looking to focus more on UCaaS platforms that can bring together video, calling, contact center, CPaaS, chat/task management.”

Should you buy ZM stock?

ZM stock trades at an NTM (next-12 months) PE multiple of only 46x which looks quite attractive. While the growth rates have come down for companies like Zoom, it should still deliver strong double-digit topline and bottomline growth in the near foreseeable future. The hybrid work environment is a reality and companies like Zoom would be prime beneficiaries of the theme.

Buy ZM Stock at eToro from just $50 Now!