By Sam Boughedda
Citi analysts opened a 90-day downside catalyst watch on Zoom (NASDAQ:ZM) on Monday, telling investors that weakening data points may further pressure downside growth.
Zoom shares have dropped 2.5% following the note, down below the $68 per share mark premarket, adding to its more than 39% decline in the past 12 months.
"We open a negative catalyst watch on Sell-rated ZM as we see negative data points piling up, which could further pressure growth rates," the analysts wrote, who have a Sell rating and a $68 price target on the stock. "Our recent CIO survey suggests an incremental de-prioritization of UCaaS spend and overall videoconferencing spending intentions lacking growth."
Beyond the firm's CIO survey data points, the analysts said the company may face other challenges, including rising competition. For example, they pointed to the expanded Microsoft/Cisco partnership "where partners at Enterprise Connect indicated this may challenge ZM renewals."
In addition, Citi analysts noted that web traffic data trends suggest continued deterioration post-January.
"From a go-to-market perspective, we also see risk of unexpected disruption with the sudden termination of prior President Greg Tomb in early March," they concluded.