It's been a mediocre week for ZoomInfo Technologies Inc. (NASDAQ:ZI) shareholders, with the stock dropping 14% to US$9.00 in the week since its latest second-quarter results. It was a pretty negative result overall, with revenues of US$292m missing analyst predictions by 5.3%. Worse, the business reported a statutory loss of US$0.07 per share, a substantial decline on analyst expectations of a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ZoomInfo Technologies after the latest results.
Following the recent earnings report, the consensus from 23 analysts covering ZoomInfo Technologies is for revenues of US$1.20b in 2024. This implies a noticeable 2.5% decline in revenue compared to the last 12 months. Per-share earnings are expected to soar 141% to US$0.10. Before this earnings report, the analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$0.38 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.
The consensus price target fell 31% to US$11.69, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on ZoomInfo Technologies, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$7.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 5.0% annualised decline to the end of 2024. That is a notable change from historical growth of 31% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ZoomInfo Technologies is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ZoomInfo Technologies. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on ZoomInfo Technologies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for ZoomInfo Technologies going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for ZoomInfo Technologies that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.