Disappointing guidance leads to sharp stock decline! Zoom (ZM.US) enterprise segment remains strong but can't mask overall weakness, Wall Street opinions diverge

According to Odaily Finance News APP, video communication platform Zoom (ZM.US) saw its stock price fall by about 7% in pre-market trading on Wednesday, after the company's guidance fell short of expectations, seemingly disappointing investors who had higher hopes. Meanwhile, Wall Street analysts have also reacted.

For the quarter ended July 31, the cloud-based video conferencing platform reported adjusted earnings per share (EPS) of $1.55, exceeding the market consensus of $1.48; revenue increased 4.9% year-over-year to $1.277 billion, in line with the market expectation of $1.27 billion. For the third quarter, Zoom expects revenue of $1.28 billion, consistent with the market consensus; adjusted EPS is expected to be between $1.46 and $1.48 (midpoint: $1.47), below the consensus expectation of $1.50.

For the full fiscal year 2027, Zoom raised its adjusted EPS guidance to between $6.08 and $6.12 (midpoint: $6.10), higher than the previous guidance of $5.96 to $6 (midpoint: $5.98). The market consensus is $6.16. Zoom also raised its revenue outlook to a range of $5.09 billion to $5.10 billion, up from the previous guidance of $5.08 billion to $5.09 billion. The market consensus is $5.09 billion.

Jefferies: Lowers target price to $116, maintains "Buy" rating.

Jefferies lowered its target price on the stock from $118 to $116 while maintaining a "Buy" rating. The bank noted that Enterprise business is showing healthy accelerated growth, but mixed guidance is weighing on the share price.

Analysts led by Samad Samana stated: "Constant currency (CC) revenue growth was +4.7%, exceeding the market consensus by 72 basis points (compared to the 12-month rolling average of 92 basis points above consensus), but operating margin was 50 basis points below consensus. Enterprise business growth accelerated to +7.8% year-over-year, though the Online business still missed its mark despite pricing adjustments. Fiscal year 2027 constant currency revenue guidance was raised slightly less than the beat this quarter, as online growth is deliberately being slowed. Operating margin guidance remains unchanged. We are not surprised by the 4% after-hours drop and believe a positive revision to the new fiscal year 2027 guidance is needed for the stock to resume its momentum."

Morgan Stanley: Raises target price to $107, maintains "Equal-weight" rating

Morgan Stanley raised Zoom's target price from $105 to $107 while maintaining an "Equal-weight" rating.

Analysts Elizabeth Porter and her team said: "The second quarter reinforced the 'platform extension' investment thesis, with Enterprise business achieving record growth and broad product adoption fueling strong bookings; however, Online business showed weakness at the top of the funnel and the constant currency outlook for the second half was not adjusted, making the timing of an overall growth inflection still uncertain."

The analysts noted that Q2 results were largely in line with expectations. Enterprise business trends strengthened, with Enterprise revenue growth accelerating to 7.8% year-over-year—the highest in three years—despite the headwinds of white-label churn, the analysts added.

RBC Capital Markets: Maintains "Outperform" rating and $130 target price

RBC Capital Markets maintains an "Outperform" rating and a $130 target price on Zoom stock.

Analysts led by Rishi Jaluria commented: "Zoom delivered solid Q2 results, with revenue, billings, and non-GAAP EPS all above consensus, though non-GAAP operating margin was below consensus. Fiscal year 2027 revenue and non-GAAP operating margin guidance are in line with market consensus, although the Q2 revenue beat was 0.7%, lower than the average 1.3% beat over the past four quarters. However, non-GAAP EPS and free cash flow (FCF) both exceeded expectations."