By Sam Boughedda
Investing.com — Zoom Video Communications Inc (NASDAQ:) shares rose more than 5% Thursday after Citic analyst Junyun Chen initiated coverage of the stock with a buy rating and $260 price target.
The analyst noted the company’s 43% share price decline for the year to date. Chen said concerns about the stock arose because of the “decline in revenue growth after the pandemic, the loss of small and medium-sized business (SMB) customers, the competition from Microsoft (NASDAQ:) Teams and other factors.”
However, Chen investors in a research note that “current market concerns are clearly excessive. And after being oversold, Zoom’s medium/long-term investment value has gradually manifested.”
The Citic analyst outlined three reasons for the buy rating on Zoom, including the current global video conferencing market, the company encouraging core video products on the platform, and the increase in offline channels and international expansion.
“Considering Zoom’s expected revenue growth of close to 20% and an operating profit margin of over 30%, we assign 16x FY2023 EPS,” explained Chen.
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