This Cheaply Valued Tech Stock Could Jump 21%, According to Wall Street Analysts. Should You Start Buying It Hand Over Fist?

Core Viewpoint - Zoom Communications has experienced a significant stock price increase of 37% over six months, driven by demand for AI-focused communication tools, but recent quarterly results indicate potential growth challenges [1][2]. Financial Performance - For fiscal 2025, Zoom reported a revenue increase of 3.3% to approximately $4.7 billion in constant currency, with earnings per share rising 6.3% year over year to $5.54 on a non-GAAP basis [4]. - The company's fiscal 2026 guidance suggests a slowdown in revenue growth, with earnings per share expected to decline to a range of $5.34 to $5.37 [4]. Customer Metrics - Zoom's enterprise customer base showed minimal growth, reporting 192,600 customers at the end of the previous quarter, a slight increase from 191,000 at the beginning of the fiscal year [5]. - The net dollar expansion rate declined by 3 percentage points compared to the previous year, indicating that enterprise customers are spending less on the platform [7]. - The online monthly average churn rate increased to 2.8% quarter-over-quarter, although it was down by 20 basis points from the year-ago period, suggesting challenges in customer retention [8][9]. Market Outlook - Analysts maintain a positive outlook for Zoom, with a 12-month median price target of $92, indicating a potential upside of 21% from current levels [3]. - Despite the low valuation of 23 times earnings compared to the Nasdaq-100 index's 30 times, the stock may not be a smart buy without clear signs of growth acceleration [10][11].