Zoom Video Communications surges on strong earnings and share buyback plan

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27th February 2024 – (San Jose) Zoom Video Communications experienced a significant boost in premarket trading on Tuesday, with shares soaring nearly 13 per cent. The surge came after the company announced better-than-expected financial results and unveiled a share buyback program worth up to $1.5 billion.

Following Monday’s closing price of $63.12, the California-based video-conferencing giant saw its shares climb to $71.10.

Although Zoom became a stock market favourite during the pandemic, as businesses swiftly embraced virtual setups, it has faced challenges in sustaining growth since then.

Year-to-date, the company’s shares have declined by 12.2 per cent, while the benchmark S&P 500 has risen by 6.3 per cent. However, analysts at J.P. Morgan noted that the current “clearly washed-out levels” of Zoom shares are offering some support to the stock.

In the previous year, Zoom shares rose modestly by just over 6 per cent. The company reported impressive financials for its fiscal fourth quarter, which ended on January 31, with an adjusted per-share profit of $1.42 on $1.15 billion in revenue. Both figures surpassed market expectations.

However, Zoom’s sales forecast for fiscal year 2025 came in slightly below analysts’ average projection. While analysts at LSEG data anticipated approximately $4.66 billion, the company estimated sales of about $4.60 billion.

J.P. Morgan analysts, who maintained a “neutral” rating on Zoom and lowered their price target by $3 to $80, emphasized that the recent results do not indicate a substantial improvement in the company’s overall business performance.