Is Zoom (ZM) Undervalued After Its Recent Share Price Gains?

Zoom Communications (ZM) has quietly delivered a solid run lately, with the stock up around 4% over the past month and roughly 5% in the past 3 months, outpacing many software peers.

See our latest analysis for Zoom Communications.

Those steady gains sit within a mixed bigger picture, with the share price now around $88 and a solid year to date share price return contrasting with a much weaker five year total shareholder return as investors reassess Zoom’s long term growth and AI pivot.

If Zoom’s recent move has you thinking more broadly about the sector, it could be worth exploring other high growth tech names through high growth tech and AI stocks.

With Zoom trading near 88 dollars, modestly below analyst targets and at a sizeable discount to some intrinsic value estimates despite slowing profit growth, is the stock quietly undervalued here or is the market already pricing in its AI ambitions?

Most Popular Narrative Narrative: 6.9% Undervalued

With Zoom closing at 88.05 dollars against a narrative fair value of 94.58 dollars, the valuation story hinges on steady growth and durable margins.

Analysts are assuming Zoom Communications's revenue will grow by 3.4% annually over the next 3 years. Analysts assume that profit margins will shrink from 25.0% today to 22.6% in 3 years time.

Read the complete narrative.

Curious how modest growth, slightly lower margins, and a richer future earnings multiple can still justify a higher value than today? The full narrative unpacks the math behind that gap.

Result: Fair Value of $94.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition from bundled communication platforms and uncertain monetization of AI features could quickly undermine the undervaluation case that investors are leaning on.

Find out about the key risks to this Zoom Communications narrative.

Build Your Own Zoom Communications Narrative

If this view does not quite fit your own research, you can dive into the numbers and build a personalized story in minutes, Do it your way.

A great starting point for your Zoom Communications research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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