By Senad Karaahmetovic
BofA analysts lowered the price target on Neutral-rated ZoomInfo Technologies (NASDAQ:ZI) stock as they believe there is a risk to the 2023 growth guidance.
The key investor debate is whether there is a possibility that the management cuts its 16-17% 2023 revenue growth guidance.
"Since the earnings call, layoffs in software and the broader technology vertical have continued, and tech spend from the financial services firms could be constrained in the near term given the recent challenges facing the vertical. Because of this, we believe there is a fair probability that management could lower the growth guidance again on the upcoming 1Q23 earnings call," the analysts wrote in a client note.
On a more positive note, they believe the software company has the "ability to generate meaningful FCF," which should provide valuation support.
Overall, the analysts see a balanced risk-reward in ZI stock given "continued layoffs in the technology sector and disruption in financial services."