On Wednesday, Jefferies began coverage on NASDAQ:ZI, ZoomInfo Technologies, with a Buy rating and established a price target of $20.00. The firm highlighted that the sales and marketing intelligence company has experienced robust growth in new customers, which may have been overshadowed by a reduction in spending by existing customers. This trend is now showing signs of stabilization after a decline from the heightened spending levels during the pandemic.
The analyst from Jefferies pointed out that the year 2024 is expected to mark the lowest single-digit growth for the company, with an anticipated high single-digit growth rate by year-end and a projection of high-teen growth for 2025. This forecast is based on the current trajectory and the company's performance metrics.
In addition to growth prospects, Jefferies underscored ZoomInfo's strong profit margins and solid free cash flow as key financial strengths. The firm also noted that the company benefits from favorable secular trends, which they believe have not been fully recognized by the market due to the focus on top-line challenges.
The coverage initiation reflects a positive outlook on ZoomInfo's future performance, suggesting that the company's financial health and market position could lead to an uptick in its stock value. The analyst's remarks indicate a belief that the current market valuation may not fully account for the company's growth potential and financial stability.
Jefferies' initiation of coverage on ZoomInfo Technologies with a Buy rating and a $20.00 price target provides investors with a new assessment of the company's stock, based on the firm's analysis of its growth trajectory, profitability, and cash flow, set against the backdrop of broader industry trends.
InvestingPro Insights
Jefferies' optimistic perspective on ZoomInfo Technologies (NASDAQ:ZI) is echoed in some of the real-time metrics and InvestingPro Tips. The company's market capitalization stands at a solid $5.99 billion, reflecting a significant presence in the industry. The InvestingPro Tips highlight that ZoomInfo is expected to see net income growth this year, with seven analysts revising their earnings upwards for the upcoming period. This aligns with Jefferies' forecast of a rebound in growth rates as the year progresses.
ZoomInfo's financial health is further underlined by its impressive gross profit margins, which were 88.5% over the last twelve months as of Q3 2023. This level of profitability is a testament to the company's operational efficiency and supports Jefferies' emphasis on the company's strong profit margins. Additionally, the company's liquid assets exceed its short-term obligations, indicating a healthy liquidity position that may reassure investors looking for stability.
However, it's worth noting that ZoomInfo is trading at a high earnings multiple, with a P/E ratio of 45.43, which suggests that the market has high expectations for future earnings growth. For investors interested in a deeper dive into ZoomInfo's valuation and financials, there are additional InvestingPro Tips available. By using the 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, investors can access a comprehensive set of insights, including 11 more tips that could help in making a well-informed investment decision.
In summary, the InvestingPro data and tips provide a nuanced view of ZoomInfo's financial health and growth prospects, which may help investors to better understand the potential that Jefferies sees in the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.