Bank of America Upgrades ZoomInfo to Buy, Sees Substantial Growth Potential

Summary

  • Bank of America has upgraded its price target on ZoomInfo (ZI) to $25.00 while elevating its rating to Buy on the back of an anticipated strong performance.
  • ZoomInfo’s enhanced growth outlook stems from a restructured executive team, monetization through AI products, and favorable macro conditions such as halted interest rate hikes.
  • The horizontal software sector’s substantial discount rate earmarks significant room for valuation growth, putting ZoomInfo in a very favorable light.
  • The company’s high single-digit revenue growth and 40%+ uFCF margins by 2024 could make it a key player in the $100 billion TAM.
  • ZI’s 4Q23 earnings call is slated for Monday, February 12th, post the market’s closing bell.
  • ZoomInfo’s shares have witnessed a surge by 6.86% during mid-day trading on Monday.

Bank of America Bullish on ZoomInfo

The research team at the Bank of America has enhanced ZoomInfo (ZI) to a Buy rating from the previous rating of Neutral. Facilitated by the firm’s belief of the company outperforming current market forecasts, they have also upped their 12-month-exclusive price target on the company to $25.00, originally standing at $20.00.

Outlook for ZoomInfo

“We consider this as a classic self-help narrative poised to outshine,” analysts shared in a note. ZoomInfo’s thriving expectation hinges on three core elements: projected revenue growth resulting from superior execution by an overhauled executive team, AI product contributions for monetization enhancement, and the favorable upshot of ceased interest rate hikes on small and middle cap stocks, inclusive of ZI.

Room for Valuation Expansion

Prevailing market evaluations depict a robust brand image for ZoomInfo, potentially bolstering demand. When the stock is surveyed, trading at a 50% discount rate vis-à-vis its counterparts in the horizontal software division implies potential scope for valuation expansion.

ZoomInfo’s Strategy for 2024

ZoomInfo has scheduled its strategic execution for 2024 aiming at rising single-digit revenue growth paired with 40%+ uFCF margins. Such promising milestones place ZoomInfo as a possible share accumulator in a substantial $100 billion TAM.

Earnings Call and Shares

ZoomInfo intends to hold its 4Q23 earnings call on the evening of Monday, February 12th, post the market shutting down. ZI has noted a surge of 6.86% during mid-day trading on Monday.

In terms of forex or trading, such an affirmative stance from Bank of America can influence the market sentiments towards ZoomInfo, potentially affecting the trading volumes and pricing of ZI shares.

PIP Penguin
Logo