On Thursday, Citi issued a downgrade for ZoomInfo Technologies (NASDAQ:ZI), moving its stock rating from Neutral to Sell. The financial services firm also reduced the price target for the company's shares to $13.00, a significant decrease from the previous target of $20.00.
Shares in ZoomInfo slipped 4.1% in pre-market trade.
The revision in ZoomInfo's stock outlook is attributed to various leading indicators that continue to show weakness. The company, which specializes in go-to-market intelligence solutions, has been experiencing declining web traffic and competitive pressures. Citi's analysis indicates these factors may hinder ZoomInfo's ability to significantly boost its growth in the fiscal year 2024.
Citi's decision also reflects concerns over the increasing challenges within the sales enablement category, an area where ZoomInfo operates. Additionally, the recent uptick in technology sector layoffs is expected to exert further pressure on the company's performance.
Despite these headwinds, ZoomInfo's shares are still trading at a premium compared to its peers that are experiencing low or no growth. This situation has led Citi to suggest that there might be potential for further downside in the company's stock value.
InvestingPro Insights
Following Citi's downgrade of ZoomInfo Technologies (NASDAQ:ZI), investors are searching for a comprehensive view of the company's financial health and future prospects. According to recent data from InvestingPro, ZoomInfo's market capitalization stands at approximately $5.97 billion, reflecting the market's current valuation of the company. The firm's price-to-earnings (P/E) ratio, a key metric for assessing a stock's value, is reported at 45.4, suggesting a higher valuation compared to the market average.
ZoomInfo's impressive gross profit margin over the last twelve months as of Q3 2023 is 88.5%, indicating a strong ability to retain a significant portion of its sales revenue as gross profit. Additionally, the company's revenue growth during the same period was 20.22%, showcasing its capacity for increasing sales.
InvestingPro Tips highlight that ZoomInfo's net income is expected to grow this year, and seven analysts have revised their earnings upwards for the upcoming period. These insights suggest optimism about the company's earnings potential, despite the downgrade from Citi. Furthermore, ZoomInfo has been recognized for operating with a moderate level of debt, which may provide some financial stability in challenging economic times.
Investors interested in a deeper analysis of ZoomInfo, including additional InvestingPro Tips, can explore further at https://www.investing.com/pro/ZI. There are 12 more tips available, which could provide a broader understanding of the company's financial position and market performance. To enhance your investment research, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
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