What happened
Zoom Video Communications (ZM 1.34%), the bellwether videoconferencing technology stock of our age, did well on a bad day for the stock market Monday. The company's shares crept up by 0.6%, in contrast to the 0.4% decline of the S&P 500 index. This was due in no small part to an analyst initiating coverage on Zoom with a positive outlook.
So what
Chinese investment bank CICC was the initiating party, in the person of analyst Ya Tao, who launched coverage with an outperform (buy) recommendation at a specific price target of $182.92. That's nearly 30% above Zoom's latest closing stock price.
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The reasoning behind the bullish recommendation and high price target wasn't immediately clear, but the bull train has been running lately for the stock. In early to mid-January, star investor Cathie Wood's highly influential ARK Invest loaded up on Zoom shares, buying a total of nearly 307,000 for its ARK Innovation ETF.
Analysts generally have a positive view of the stock, too. According to figures compiled by Yahoo! Finance, on average they are anticipating a 46% rise in per-share earnings for this year compared to 2021, on a 54% improvement in revenue.
Now what
One of the great highfliers of the pandemic, Zoom has traded at more modest levels as the threat of the omicron variant recedes. Yet while the recent remote-working trend will deflate somewhat as we exit the coronavirus era (fingers crossed), "hybrid" and pure work-from-home models will likely prove more resilient than many anticipate. After all, these can save costs and boost productivity if implemented wisely.
The new CICC recommendation and lofty price target for the tech stock, then, look entirely justified.
