Zoom shares exceed analysts expectations ahead of Q1 earnings

Zoom Video Communications will unveil its first quarter (Q1) earnings on Tuesday 1 June, with the stock already exceeding analysts’ target prices and capable of rallying even higher if it delivers a strong set of quarterly results.

The 22 analysts offering 12-month price forecasts for Zoom have a median target of $137.50 and a high estimate of $200, with the video conferencing company trading at $203.29 per share at the time of publication.

Wall Street analysts are expecting Zoom to deliver a earnings per share (EPS) of $0.10 on $202.5 million in Q1 sales – the company managed to exceed forecasters estimates in its previous quarter back in March, which helped drive a 60% gain for the stock in the week that followed.

If the video conferencing company can beat analysts expectations for another consecutive quarter it’s could help propel the stock even higher in weeks ahead, with investors also eager for an update on its full-year guidance.

How long will Zoom shares keep rising?

Since the start of the year, Zoom shares have climbed 195%, with the stock climbing 13% higher on Monday alone, ahead of the company’s latest quarterly earnings.

The company has come out on top amid the Covid-19 crisis and subsequent government-imposed lockdowns, which have forced businesses to invest heavily in video conferencing solutions with employees stuck working from home for the foreseeable future.

The shift in the way businesses are conducting work amid the Covid-19 pandemic has helped generate a strong increase in sales for the video conferencing company, but investors are eager to see if this uptick in revenues will remain as lockdown restrictions ease and people return to offices.

Zoom: technical analysis

Zoom has been one of the big winners of the 2020 Covid-19 market crisis, as millions around the world utilise its products. Unsurprisingly, that means the stock has been in high demand, forming an uptrend since February that will delight any trend follower.

We have seen higher highs and higher lows over this time, as rallies are followed up by modest retracements which continue to provide buying opportunities, according to Chris Beauchamp, chief market analyst at IG.

While the price has stalled around $180 since late April, weakness in late April and towards the end of May eventually resolved into a renewed rally, with the 50-day SMA (currently $150) and rising trendline support from mid-January providing support to the price, Beauchamp said.

‘The latest bounce takes the price on to $180 once more, with a break above here creating a new higher high and reinforcing the bullish view,’ he added. ‘A reversal below $150 would be needed to dent this, as for the time being the buyers are solidly in control.’