How Wall Street Rates Zoom Video Communications After IPO Quiet Period Expiration

May 13, 2019 by Jon C. Ogg

Zoom Video Communications Inc. (NASDAQ: ZM) may have faced an unlucky day for its underwriters’ quiet period to end. After all, trade tariffs with China had the Dow Jones industrials down over 400 points and the S&P 500 down almost 50 points in early Monday trading.

Zoom had one of the hottest initial public offerings so far in 2019. After pricing at $36, its post-IPO range is $59.94 to $80.79. The stock closed up almost 6% at $79.63 on Friday, but the post-IPO coverage has not been as aggressive, with the shares already up so much.

As for the formal IPO terms out of the chute, Zoom sold 20,869,565 shares of its Class A common stock. Of that number, the company itself sold 9,911,434 shares and certain selling stockholders offered 10,958,131 shares. The total offering came to 24 million shares, after the exercise of the overallotment option.

24/7 Wall St. has collected almost all the formal analyst ratings from the underwriting syndicate, and most of the firms’ price targets have been seen as well.

From the lead book-running managers:

  • Morgan Stanley: Equal Weight with a $75 target price
  • JPMorgan: Overweight and $113 target price
  • Goldman Sachs: Neutral with a $47 target price
  • Credit Suisse: Neutral with an $80 target price

From the additional book-running managers:

  • Merrill Lynch: Buy and $89 price objective
  • RBC Capital Markets: Sector Perform and $90 price target
  • Wells Fargo Securities: Market Perform and $75 price target

From Zoom’s co-managers:

  • JMP Securities: Market Perform
  • KeyBanc Capital Markets: Sector Weight
  • Piper Jaffray: Overweight with a $90 target
  • Stifel: Hold and $75 target price
  • William Blair: (not seen at the time)

Other firms already had issued coverage ahead of the quiet period, as the underwriting restrictions and guidelines for post-IPO analyst coverage did not apply. These calls were seen as follows:

  • Summit: Sell with a $45 price target
  • Rosenblatt: Neutral with a $60 target price
  • Bernstein: Outperform with an $89 target price

After almost 30 minutes of trading, the stock was trading down 7.7% at $73.51, with only about 550,000 shares traded in that time.


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