Tuesday, Stifel made adjustments to ZoomInfo Technologies' (NASDAQ:ZI) financial outlook, reducing the stock's price target to $16 from $20, while still endorsing a Buy rating. The decision comes as the firm anticipates ZoomInfo's second-quarter earnings report scheduled for August 5th.
Stifel conducted a survey of 25 ZoomInfo customers to gauge aspects such as market competition, pricing flexibility, and demand for the company's AI Copilot, among other factors impacting the company's net retention rates. The feedback on net retention was particularly encouraging, suggesting potential recovery in this metric for both small to medium-sized businesses (SMBs) and mid-market (MM) customers.
Despite observing weaker data points among SMBs, which aligns with ZoomInfo's previous quarterly commentary, the overall survey results indicated a positive trend toward improved net retention rates across customer segments. This aspect of customer retention is deemed by Stifel as crucial given that ZoomInfo's valuation multiples have been compressed by sub-par performance in this area.
While the survey hinted at a rebound in net retention rates for both SMB and MM customer groups, Stifel has adjusted the price target to reflect a more cautious valuation. The firm maintains its positive stance on ZoomInfo's stock, affirming the Buy rating despite the lowered price target.
ZoomInfo Technologies, a company specializing in go-to-market intelligence solutions, is set to reveal its second-quarter financial performance on August 5th, an event that market watchers anticipate for further insights into the company's growth trajectory and customer engagement.
ZoomInfo Technologies has been in the spotlight recently due to mixed analyst outlooks and shifting market trends. RBC Capital Markets downgraded ZoomInfo to "Underperform," while Barclays maintains an "Equal Weight" rating. JMP Securities holds a "Market Perform" rating, and KeyBanc previously rated ZoomInfo as "Overweight."
ZoomInfo also announced the release of ZoomInfo Copilot, an AI-powered platform that has reportedly doubled sales opportunities for its beta users. The platform integrates AI with ZoomInfo's B2B data to provide users with detailed account overviews and AI-guided recommendations. Meanwhile, KeyBanc adjusted ZoomInfo's price target to $18.00 from $20.00, maintaining an "Overweight" rating. These developments highlight the dynamic nature of the investment landscape and the evolving strategies of companies and investors alike.
InvestingPro Insights
As ZoomInfo Technologies (NASDAQ:ZI) approaches its second-quarter earnings report, it's pertinent to consider the company's financial health and market performance through the lens of InvestingPro data and insights. The company has a market capitalization of $4.3 billion and a high gross profit margin of 88.96% for the last twelve months as of Q1 2024, reflecting its strong ability to control costs relative to revenue. In line with Stifel's positive outlook, InvestingPro Tips highlight that ZoomInfo is expected to see net income growth this year, and it also boasts a high shareholder yield, which could be attractive to investors seeking companies with potential for return on their investment.
Despite a challenging year reflected by a price drop of over 56% from the previous year, the company is trading at a high earnings multiple of 57.19, which indicates that investors may expect future growth and profitability. Additionally, with ZoomInfo trading near its 52-week low, some investors might view this as a potential entry point, especially considering that analysts predict the company will be profitable this year. For those interested in deeper analysis and additional insights, InvestingPro offers 14 more tips for ZoomInfo, which can be accessed with a subscription. As an incentive, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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