ZoomInfo Technologies (ZI – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Kash Rangan from Goldman Sachs reiterated a Sell rating on the stock and has a $8.40 price target.
Kash Rangan has given his Sell rating due to a combination of factors that, despite some positive developments, pose challenges for ZoomInfo Technologies. The company reported better-than-expected fourth-quarter results for 2024, with revenue, operating margins, and earnings per share exceeding expectations. Additionally, the number of high-value customers and the expansion of the dollar-based net retention rate showed improvement, alongside significant contributions from new Copilot deals.
However, Rangan highlights concerns that justify the Sell rating. The strategic shift in go-to-market resource allocation from smaller to larger customers could hinder overall revenue growth. Furthermore, while new customer acquisitions have been strong, the ability to upsell existing customers remains uncertain, potentially impacting future growth sustainability. The net expansion rates, although improved, are still below 90%, indicating that further operating margin improvements might be difficult to achieve. Overall, while management’s focus on larger markets is seen as prudent, Rangan seeks more concrete signs of success to support a more optimistic outlook on revenue growth and stock performance.
Rangan covers the Technology sector, focusing on stocks such as Salesforce, Workday, and Microsoft. According to TipRanks, Rangan has an average return of 10.4% and a 58.75% success rate on recommended stocks.