Zoom Video Rockets Up on Strong Earnings and $1.5 Billion Stock Buyback

California-based Tech Giant Sees Pre-market Rally Following Stellar Performance

Feb 27, 2024 - 07:13
Feb 27, 2024 - 07:13
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Zoom Video Rockets Up on Strong Earnings and $1.5 Billion Stock Buyback
Zoom Video Rockets Up on Strong Earnings and $1.5 Billion Stock Buyback

Zoom Video Communications witnessed a remarkable uptick in its stock value, with shares soaring nearly 13% in premarket trading. This surge comes hot on the heels of the company's impressive financial results and the unveiling of a substantial buyback program totaling $1.5 billion.

Headquartered in California, Zoom Video's stock reached $71.10 during premarket trading, marking a significant increase from its previous day's closing price of $63.12.

As a leading provider of video-conferencing solutions, Zoom experienced unprecedented demand during the pandemic, as businesses rapidly embraced remote work setups. However, despite this initial surge, the company's performance has shown signs of plateauing in recent times.

Year-to-date, Zoom's shares have seen a decline of 12.2%, in stark contrast to the 6.3% rise observed in the S&P 500 index. Nonetheless, analysts from J.P. Morgan pointed out that the stock appears to be finding stability at what they describe as "clearly washed-out levels."

In its fiscal fourth quarter ending January 31, Zoom reported adjusted earnings per share of $1.42 on revenue totaling $1.15 billion, surpassing market expectations. However, the company's sales forecast for fiscal year 2025 fell short of analysts' projections, with an anticipated revenue of approximately $4.60 billion compared to an average expectation of $4.66 billion.

J.P. Morgan analysts, while maintaining a "neutral" rating on Zoom's stock, opted to lower the brokerage's price target to $80. They expressed reservations about the company's outlook, suggesting that the latest results do not indicate a significant improvement in its business trajectory.

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