On Wednesday, KeyBanc initiated coverage on ZoomInfo Technologies (NASDAQ:ZI), assigning an Overweight rating and setting a share price target of $20.00.
The firm cited several reasons for the positive outlook on the company, including its strong retention dynamics, net-new revenue growth potential, and an improved macro environment. Moreover, ZoomInfo's limited reliance on the high-tech industry and its robust cash flow profile were highlighted as key factors.
The analyst pointed out that ZoomInfo's shares are currently trading at 16 times its forecasted 2024 free cash flow to firm (FCFF), which is considered attractive. The company's efficiency in generating cash flow was noted as a potential draw for both strategic and financial buyers, despite the fact that it may cap margin expansion opportunities.
KeyBanc's coverage on ZoomInfo suggests that the company's stock is undervalued given its potential to outperform based on fundamental business strengths. The firm believes that the current multiple does not fully reflect the company's prospects for growth and profitability.
The positive assessment of ZoomInfo's lesser dependence on the high-tech vertical suggests a diversified customer base, which could provide stability against sector-specific downturns. This aspect, combined with the company's strong cash flow, forms part of the rationale behind the Overweight rating.
ZoomInfo's potential appeal to buyers, as mentioned by KeyBanc, indicates that the company could be an attractive acquisition target due to its financial health and market position. The firm's analysis underscores a belief in the company's ability to exceed expectations on fundamental financial metrics.
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