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Bernstein analyst Zane Chrane believes that this bull run is related to the progress with the platform’s cloud-based phone service Zoom Phone.
Last week was the best week for Zoom Video Communications Inc (NASDAQ: ZM) stock since October. The price per share at the close of Friday, 15th was $384.53. On the same day, Bernstein announced that the video conferencing company’s stock was its highest conviction pick for 2021.
Today, ZM stock is 1.47% up in the pre-market, trading at $390.
Despite the 35% decline since October, Zoom shares have experienced a staggering 400% rise in 12 months. A very profitable time for tech investors who got in early on Zoom stock. T. Rowe Price’s Global Technology Fund (PRGTX), managed by Alan Tu, returned an impressive 75.6% in 2020. Morningstar reports that the fund surpassed 81% of its technology counterparts. Further, the fund outdid the Morningstar US Technology Total Return Benchmark Index by 27.6%.
Bernstein analyst Zane Chrane attributes this bull run to the platform’s cloud-based phone service Zoom Phone.
“As Zoom Phone users are all on paid plans (i.e., no free tier like with videoconferencing), we should see related revenue grow much more rapidly relative to the user count than has been the case with Zoom VC. Such a growth trajectory would yield about $4 billion in annual recurring revenue by the end of calendar year 2023, at which point Phone should still be growing top line about 50% year over year”, Chrane wrote.
Director of Options at Simpler Trading Danielle Shay believes that there is “a lot of potential for growth” within the mobile and webinar sphere. This was during an interview on Friday on CNBC’s Trading Nation. He said:
“Zoom was already at the forefront of the work-from-home movement even before it happened, and as they’re continuing to innovate and expand and move into the webinar arena, move into telecommunications, I think there’s a lot of potential for growth here, and I think that the general public isn’t really aware of that at this point”
Shay asserts that the recent pull-back is setting the stage for long-term growth.
However, Senior Technical Research Analyst at Piper Sandler, Craig Johnson, begs to differ. In the same interview, he pointed out that Zoom’s stock had “broken the uptrend support line that’s been intact, you’ve got a bearish divergence here happening in momentum, and a break below 337 is going to start a whole leg lower.”
Johnson’s predicted $377 would be a drop of about 12% from prevailing Zoom (ZM) stock levels.