ZM's consensus forward next twelve months' P/E multiples has de-rated from 83.5 times as of J(date of my prior article) to 42.8 times as of December 6, 2021.
In my prior June 2021 article, I stressed that "Zoom stock is not a good Buy for me now, as its rich valuations are not aligned with the company's slower pace of growth going forward." My views have been validated by ZM's valuation multiple compression in the past couple of months, and the company's recent quarterly earnings which point to a slowdown.
As such, I maintain my Hold investment rating for Zoom. high-teens percentage level) which could help to support its current valuations. In other words, although it is a given that Zoom's revenue growth going forward will not be as strong as it was in fiscal 2020 during the peak of the pandemic, ZM's sustainable top line expansion rate on a normalized basis post-pandemic might still be rather decent (i.e. For example, Zoom Phone has increased its sales by over +100% YoY in Q3 FY 2022.
Secondly, new products, which currently do not account for more than 10% of ZM's revenue on a stand-alone basis, do have the potential to surprise on the upside in the future considering recent growth momentum. Firstly, Zoom's increase in its larger client base (more than $100,000 in sales every year) might be able to partially offset the slowdown in the smaller customer (less than 10 staff) segment's growth. The current article shine the spotlight on Zoom's most recent Q3 FY 2022 (YE January 31) earnings and discusses whether this changes my views of the company.Īfter the company's recent earnings, investors need to consider two key factors. My previous article on ZM highlighting expectations of the company's slower growth in the later part of this year was published on June 17, 2021. I still rate Zoom Video Communications, Inc ( NASDAQ: ZM) as a Hold. Luis Alvarez/DigitalVision via Getty Images Elevator Pitch
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