Zoom Video Communications shares jumped for a sixth straight session on Monday, as investors continued to bet that the teleconferencing company would be one of the rare winners from the coronavirus pandemic.
Shares spiked as much as 22%, trading almost twice its daily average volume, in their biggest one-day percentage gain since June 2019. The stock is up more than 40% over the six days, and it has more than doubled this year, with recent gains coming on signs of higher usage.
On Friday, the company’s chief financial officer said it had bolstered its network capacity in order to manage unprecedented demand. The surge comes as more and more people work from home or use the video-conferencing software to keep in touch rather than meet in person.
Recent data from Sensor Tower have shown “big upticks across the board” for mobile-app downloads for work-from-home services. Zoom’s app had download growth of 109%, according to the data. “Many businesses are making their first moves into remote work and gravitating toward the biggest players, like Zoom or Microsoft,” said Randy Nelson, head of mobile insights at Sensor Tower.
KeyBanc Capital Markets wrote that such trends were driving “a billings inflection in the first two weeks of March”, along with higher market share for Zoom.
Needham last week started coverage on the stock with a buy rating, expecting it will benefit both throughout the pandemic as well as after, as remote work becomes more common.
Tailwind
The coronavirus tailwind contributed to stronger-than-expected fourth-quarter results earlier this month, and analysts continue to grow more bullish on Zoom’s prospects.
For the first quarter, Zoom is expected to report adjusted earnings of about US$0.10/share, a forecast that has risen by 68% over the past month, according to Bloomberg data. Revenue expectations have risen 7.6% over the past month.
For the full year, analysts expect Zoom to report adjusted earnings of about $0.44/share and revenue of $917-million. The earnings forecast is up more than 50% over the past month, while the consensus for revenue is ahead 5.9% over the same period. — Reported by Ryan Vlastelica, (c) 2020 Bloomberg LP