Downbeat financial forecasts from ZoomInfo Technologies triggered a wave of consternation among Wall Street analysts, who lowered their targets for the stock price and pushed back their timelines for a recovery in spending on software.
ZoomInfo
(ticker: ZI) stock was down 26% at $18.95 in early trading on Tuesday as investors digested the reduced guidance, issued late Monday. The stock was already down 15% so frar this year as of Monday’s close.
“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,” analysts at
J.P. Morgan
wrote.
ZoomInfo provides database information for corporate sales and marketing teams and had already been hit by a pullback in spending earlier this year. The cut to its financial forecasts suggests hopes of a quick recovery could be overdone.
The J.P. Morgan analysts argued that problems with demand weren’t necessarily specific to ZoomInfo, given that peers such as LinkedIn have also seen significant slowdowns in growth. They lowered their target price on ZoomInfo stock to $26 from $31 but kept an Overweight rating on the stock.
Analysts at Stifel lowered their target price on ZoomInfo from $30 to $27 while keeping a Buy rating on the stock. They noted ZoomInfo said it ran into difficulties in deal renewals in June, primarily from mid-market software companies.
“We continue to believe in the long-term opportunity for ZoomInfo, while acknowledging that nearterm fundamentals will improve when the software vertical begins another investment cycle,” the Stifel analysts said.
The question now is how long will a recovery take. ZoomInfo executives said on their earnings call that they expect it will be harder to renew deals through to the end of the year. That matches the word from other companies that have also warned of restricted spending.
“We view ZI’s strong competitive moat and efficiency as underappreciated company attributes, in spite of challenging near term headwinds,” analysts at D.A. Davidson wrote in a research note.
They lowered their target price on the stock to $34 from $40 but kept a Buy rating.
Write to Adam Clark at [email protected]
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