News Flash: Analysts Just Made An Incredible Upgrade To Their Zoom Video Communications, Inc. (NASDAQ:ZM) Forecasts
Zoom Video Communications, Inc. (NASDAQ:ZM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Zoom Video Communications has also found favour with investors, with the stock up a notable 28% to US$208 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After this upgrade, Zoom Video Communications' 26 analysts are now forecasting revenues of US$1.8b in 2021. This would be a huge 189% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$932m of revenue in 2021. It looks like there's been a clear increase in optimism around Zoom Video Communications, given the considerable lift to revenue forecasts.
Check out our latest analysis for Zoom Video Communications
Additionally, the consensus price target for Zoom Video Communications increased 60% to US$202, showing a clear increase in optimism from the analysts involved. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Zoom Video Communications analyst has a price target of US$192 per share, while the most pessimistic values it at US$55.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Zoom Video Communications' growth to accelerate, with the forecast 189% growth ranking favourably alongside historical growth of 51% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Zoom Video Communications is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Zoom Video Communications.
Looking to learn more? We have analyst estimates for Zoom Video Communications going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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