Zoom Video (ZM) Stock Forecast & Price Target

Zoom Communications is projected to achieve a revenue of $5,339 million in FY28, reflecting a growth rate of approximately 5.3% year-over-year, largely driven by the successful execution of its "system of action" strategy. The company is also expected to experience margin expansion to 41.0%, with a projected pro forma earnings per share (EPS) of $6.18. Additionally, promising metrics such as a 10% increase in remaining performance obligations (RPO) to $4.2 billion and robust growth in Zoom Phone annual recurring revenue (ARR) signal strong demand for its innovative communications solutions.

Zoom Communications has experienced a decline in gross margins, which fell by 20 basis points sequentially to 79.8%, despite a year-over-year increase, indicating pressure on profitability amid ongoing investments in AI and cost optimization efforts. Additionally, the company’s fiscal year 2027 free cash flow margin guidance of 34% is below consensus estimates of 39%, primarily impacted by an increase in capital expenditures and anticipated headwinds from interest income and tax obligations. Lastly, there is significant execution risk tied to management's strategic overhaul of go-to-market motions and internal sales culture, which could hamper growth and adversely affect investor sentiment if not successfully implemented.