Zoom shares jumped 12% after the report. Are they worth buying now?

Shares of Zoom Communications, which specializes in video conferencing and corporate call centers, rose sharply after the company beat earnings and revenue expectations for last quarter. But the stock is still 85% below its 2020 high. And Zoom's long-term prospects remain controversial among analysts, Barron's writes.

Shares of Zoom, which specializes in corporate video calling, rose 12.7% to $82.5 in trading Friday, the highest closing price since Ma. 20. But even with Friday's gains, the stock now stands about 85% below its all-time peak reached in October 2020, according to Dow Jones Market Data, Barron's notes.

The company a day earlier reported revenue and earnings for the second quarter of fiscal 2026 that beat analysts' expectations and also improved its full-year guidance. However, the outlook only increased by $9 million on either side of the range to $4.817 billion to $4.827 billion (at fixed exchange rates).

Zoom's improved full-year outlook is only a semblance, according to KeyBanc Capital Markets analyst Jackson Ader, whose note was quoted by Barron's. He says the $9 million difference is less than the amount by which the company beat forecasts in the second quarter. That means the company actually worsened its outlook for the second half of the year, the analyst notes.

"Despite the encouraging tone of the comments and the positive wording of the forecast, the resulting decline in guidance for the second half of the year does not fit the overall picture in any way," Ader wrote.

Therefore, KeyBanc maintained a sell recommendation on Zoom shares (Underweight rating) and lowered the target price from $73 to $69. It is 16% lower than the closing price on August 22.

- Matthew Harrigan of Benchmark Equity Research reiterated a Buy rating and $102 target price on Zoom shares, implying a 23.6% upside to the Aug. 22 closing price. Harrigan cited growing interest in artificial intelligence-based products.

"AI is being integrated into Zoom's core videoconferencing product, as well as empowering contact center and hybrid workflow solutions," Barron's quoted Harrigan's note as saying. - This allows customers to reduce costs."

- Cantor Fitzgerald analyst Thomas Blakey maintained a neutral rating on Zoom shares, as well as a $87 target price (expecting a 5.5% increase). He positively assessed the quarterly results as well as the outlook upgrade, Barron's reports.

- RBC Capital raised its target price on Zoom shares from $95 to $100, maintaining an Outperform recommendation. According to the investment bank's analysts, Zoom reported "convincingly strong second-quarter results," exceeding consensus forecasts on all key metrics, Investing.com wrote. This was the highest revenue growth rate in the past 11 quarters, or eight quarters if measured in fixed exchange rates (on a comparable currency basis), RBC analysts said. The investment bank also cited steady progress in the development of artificial intelligence-based products, a stable revenue retention rate and accelerating growth in the number of customers spending more than $100,000 a year.

For the second quarter of fiscal 2026, ended July 31, Zoom's adjusted earnings were $1.53 per share, compared to Wall Street analysts' forecast of $1.38 (Barron's data). Revenue rose 4.7% from the same quarter last year to $1.22 billion - just above LSEG's average forecast of $1.2 billion.

For the third quarter, Zoom forecast revenue in the range of $1.21 billion to $1.215 billion, just above analysts' average forecast of $1.21 billion, according to LSEG, Reuters noted.

Integrating artificial intelligence into its product lineup and expanding its range of services has helped Zoom maintain growth in its core business of video conferencing, the agency writes. It has also helped open up opportunities to enter and scale in new markets, Reuters said.

The company in June introduced Virtual Agent 2.0, which can use an AI agent to autonomously perform complex tasks such as processing returns, updating accounts or booking appointments. Zoom also launched a number of new AI-agent-based features in July, including the Custom AI Companion add-on, which allows small business owners to use the agent on third-party video conferencing platforms such as Google Meet as well, Reuters reported.

This article was AI-translated and verified by a human editor