Zoom Video Communications Inc. (SM) reports first quarter 2022 earnings after Monday’s closing bell, with analysts looking for earnings of $1.16 per share on revenue of $990.2 million. If met, earnings per share (EPS) will represent a 26% increase in earnings compared to the same quarter last year. The virtual meeting provider has beaten estimates every quarter since its publication in April 2019, with revenue growing 191.4% year over year in the quarter ended May 31.
Increasing competition in a post-pandemic world
The company continues to diversify its product catalog following the historic 2020 uptrend driven by pandemic lockdowns around the world. Meanwhile, multiple competitors are offering alternatives to the Zoom platform while lockdowns have met huge political opposition despite the rise of the Delta variant. It’s been a race against time for Zoom as it tries to replace lost earnings to maintain its rich valuation and high stock price.
Morgan Stanley analyst Meta Marshall upgraded Zoom to ‘Overweight’ last week, noting, “We think the corporate momentum, coupled with margin headwinds, is creating a positive outlook in FQ2. While revenue expectations are not low, we believe they are achievable, which, combined with the upcoming Zoomtopia and FY23 guidance in a few quarters, makes us more optimistic about the stock at its current valuation.”
Wall Street and Technical Outlook
Wall Street’s consensus has improved in the past three months and now stands at an “Overweight” rating based on 14 “Buy”, 1 “Overweight”, 11 “Hold”, 1 “Underweight” and 1 “Sell” — recommendation. Price targets currently range from a low of $242 to a street high of $525, while the stock ended Friday’s session more than $75 below the average target of $416. This low placement points to investors’ apathy toward pandemic beneficiaries. , most recently illustrated by: Peloton Interactive Inc.’s (PTON) steep decline in profit.
Zoom broke above the 2009 high of 107.34 in February 2020, entering a historic uptrend reaching a record high at 588.84 in October, just weeks before. Pfizer Inc. (PFE) and BioNTech SE (BNTX) announced the success of their vaccine. The stock has had a long run of lower highs and lower lows since then, repeatedly crossing the 200-day moving average and 50% rally retracement since March. Accumulation fell to an 8-month low last week, highlighting slow-motion profit taking that could easily extend into the fourth quarter.
For an overview of all economic events of this week, visit our economic calendar.
Disclosure: The author held no positions in the above securities at the time of publication.
This article was originally posted on FX Empire