• The average price target for Zoom Video Communications, Inc. (NASDAQ:ZM) has increased from $74.81 last year to $85 last month, indicating growing optimism among analysts.
• Zoom's strategy to diversify its revenue streams through product expansion, including Zoom Phone, Zoom Rooms, Zoom Events, and enhancements to the Zoom Developer Platform and Zoom App Marketplace, is positively impacting analysts' price targets.
• Despite the positive trend in price targets, Zoom faces challenges such as a historical negative one-day return following earnings announcements in 68% of cases and cautious guidance for fiscal 2026 and beyond.

Zoom Video Communications, Inc. (NASDAQ:ZM) has experienced a positive trend in its consensus price target over the past year. The average price target has increased from $74.81 last year to $85 last month. This upward trend indicates growing optimism among analysts about Zoom's stock performance. The company's efforts to innovate and expand its product offerings, such as Zoom Phone and Zoom Rooms, may have contributed to this positive sentiment.

Zoom's strategy to diversify its revenue streams and strengthen its position in the unified communications market is evident in its product expansion. The introduction of Zoom Events and enhancements like the Zoom Developer Platform and Zoom App Marketplace are key moves. These initiatives likely play a role in the increased price targets, reflecting analysts' confidence in Zoom's growth potential.

Despite the positive trend in price targets, Zoom's stock has historically shown a negative one-day return following earnings announcements in 68% of cases. As Zoom prepares to release its earnings report on May 21, 2025, analysts, including Citigroup's Tyler Radke, have set a price target of $139. This target reflects a cautious outlook, considering the company's modest revenue growth and strong profitability gains.

Zoom's financial performance is underpinned by a healthy balance sheet, but both management and analysts have issued cautious guidance for fiscal 2026 and beyond. They anticipate minimal growth in earnings and free cash flow. Despite Zoom's low valuation multiple and substantial liquid assets, factors like limited growth prospects and high stock-based compensation offset the benefits of stock buybacks.

As Zoom approaches its earnings report, analysts predict a potential decline in earnings. According to Zacks, Zoom may not have the right combination of factors for an earnings beat. Investors should closely monitor upcoming earnings reports and announcements regarding new product developments or strategic partnerships, as these could further influence analysts' price targets and the stock's performance.