The recent financial forecasts from ZoomInfo Technologies have caused concern among Wall Street analysts. As a result, these analysts have adjusted their targets for the stock price and revised their expectations for a recovery in software spending.
ZoomInfo’s stock (ticker: ZI) experienced a decline of 26% to $18.95 during early trading on Tuesday after investors processed the revised guidance provided on Monday. It is important to note that the stock had already experienced a decrease of 15% so far this year, based on Monday’s closing.
Experts at J.P. Morgan acknowledged underestimating the impact of multiple obstacles in ZoomInfo’s core market, which continue to hinder the company’s short-term growth. They stated, “We underestimated the magnitude to which multiple lightning strikes to ZoomInfo’s core market could continue to weigh on the company’s near-term growth.”
ZoomInfo specializes in providing database information for corporate sales and marketing teams. However, earlier this year, the company had already faced setbacks due to reduced spending. The adjusted financial forecasts indicate that hopes for a swift recovery in this regard may be overly optimistic.
Analysts at J.P. Morgan also pointed out that the challenges with demand are not unique to ZoomInfo. Even LinkedIn, among other competitors, has experienced significant growth slowdowns. As a result, they have lowered their target price for ZoomInfo stock to $26 from $31 but maintain an Overweight rating on the stock.
ZoomInfo Faces Challenges in Deal Renewals
Analysts at Stifel have recently adjusted their target price for ZoomInfo, reducing it from $30 to $27. However, despite this adjustment, they have still maintained a Buy rating on the stock. The reason behind their decision is due to ZoomInfo’s reported difficulties in deal renewals, particularly with mid-market software companies in the month of June.
While acknowledging the company’s short-term troubles, the Stifel analysts expressed their confidence in the long-term potential of ZoomInfo. They believe that the software vertical will experience another investment cycle, which will ultimately lead to improved fundamentals.
The main question that arises now is how long the recovery process will take. ZoomInfo executives have expressed their expectations that it will become more challenging to renew deals throughout the rest of the year. This aligns with the sentiments of other companies that have also cautioned against restricted spending.
In spite of the current headwinds, analysts at D.A. Davidson believe that ZoomInfo possesses strong competitive advantages and a level of efficiency that are often overlooked. In a research note, they lowered their target price on the stock from $40 to $34 but maintained a Buy rating.
Overall, while ZoomInfo may currently be facing some obstacles, analysts remain optimistic about the company’s future prospects and its ability to overcome these challenges.
