Keybanc Initiates Coverage of Zoom Communications (BIT:1ZM) with Underweight Recommendation

Keybanc initiated coverage of Zoom Communications (BIT:1ZM) on June 6, 2025, with an Underweight recommendation, while the average analyst one-year price target suggests a 12.97% upside to €80.77. Despite a projected 7.75% increase in annual revenue to 5,063MM, non-GAAP EPS is forecasted to decrease by 2.65% to 4.75. Institutional ownership shows a mixed sentiment, with the number of funds holding 1ZM increasing slightly, but total shares owned decreasing by 4.89%.

Analysis

Keybanc initiated coverage on Zoom Communications (BIT:1ZM) on June 6, 2025, with an Underweight recommendation, introducing a cautious institutional perspective. This contrasts with the average one-year analyst price target of €80.77 as of June 2, 2025, which suggests a 12.97% upside from the latest closing price of €71.50, with forecasts ranging from €57.12 to €105.06. Zoom's projected annual revenue is expected to increase by 7.75% to 5,063MM, indicating continued top-line growth. However, this is offset by a projected 2.65% decrease in annual non-GAAP EPS to 4.75 from the prior forecast, signaling potential margin pressures or increased investment. Fund sentiment presents a mixed picture: the number of institutions reporting positions rose by 1.86% to 1,257 in the last quarter, and the average portfolio weight dedicated to 1ZM increased by 0.36% to 0.23%. Conversely, total shares owned by institutions decreased by 4.89% to 201,314K shares in the last three months. Notable institutional movements include Vanguard Total Stock Market Index Fund (VTSMX) increasing its share count by 0.74% but decreasing its portfolio allocation by 5.00%. Aqr Capital Management reduced its shareholding by 1.79% and significantly cut its portfolio allocation by 78.76%. In contrast, JPMorgan Chase markedly increased its holdings by 64.41% and its portfolio allocation in 1ZM by 149.10%, indicating strong conviction from at least one major institution despite broader institutional selling and the new Underweight rating.

Key Decisions for Investors

• Investors should weigh Keybanc's Underweight rating against the average analyst price target upside, recognizing the conflicting signals in the current market assessment for Zoom Communications.
• Monitor the divergence between projected revenue growth and declining non-GAAP EPS, as this could indicate evolving profitability dynamics or strategic reinvestment impacting near-term earnings.
• Closely observe institutional ownership trends, particularly the contrasting behaviors of large funds like Aqr Capital Management and JPMorgan Chase, as this may signal shifts in broader market conviction or specific fund strategies concerning Zoom's outlook.
• Consider the decrease in total institutional share ownership alongside the increase in the number of funds holding the stock, which may suggest smaller, more diversified positions are being taken or that larger holders are reducing exposure.