2023-06-28 08:37:54 ET
ZoomInfo Technologies ( NASDAQ: ZI ) stock rose ~6% premarket on Wednesday after Needham started coverage on the company with a Buy rating and a $35 price target.
Needham's analysts noted that they see the current valuation as an attractive entry point for investors who are willing to wait for a recovery in broader demand trends for the company's solutions.
The analysts view two main items which can accelerate growth in the near term — 1) sales of advanced functionality, i.e. modules not related to company and contact database information; 2) a widening of vertical exposure beyond software and business services, which is 66% of total revenue.
In the long-term, the analysts think that attractive unit economics of ZoomInfo's business model backs impressive FCF leverage.
The firm added that origins in company and contact database provide strong barrier to entry. The analysts see ZI's ability to generate accurate and detailed company and contact information as a main point of differentiation which helps its customers develop a broader sales engagement platform.
With an LTV to CAC of 10:1 or higher, including gross revenue retention above 90%, the analysts believe the ZoomInfo's financial profile deserves a premium valuation even with slower-than-peer revenue growth.
The analysts added that while the industry looks highly competitive, they think that most of the solutions they have discussed in their note are complementary to ZoomInfo compared to competition.
ZI +5.55% to $25.48 premarket June 28
More on ZoomInfo
- ZoomInfo: Sequential Growth Through FY23 Should Be A Catalyst For Stock Price
- ZoomInfo: Green Shoots And Generative AI - A Potentially Powerful Combination
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ZoomInfo rises after Needham starts coverage with Buy