ZoomInfo Technologies ( NASDAQ: ZI ) shares plunged nearly 11% in premarket trading on Tuesday as it reported fourth-quarter results and issued weak guidance, prompting investment firm UBS to downgrade the software and data company.
Analyst Taylor McGinnis lowered the firm's rating on ZoomInfo Technologies ( ZI ) shares to neutral from buy, noting that there is now likely an investor debate on whether the outlook is conservative due to the "disappointing" net revenue retention of 104% and a greater weighting towards new logo contribution.
"Given the potential risks to this outlook combined with a belief that catalysts for [ZoomInfo] are now likely skewed towards [second-half of 2023] (given possible sales disruption and a continuation of tougher renewals in [first-half of 2023]), we think ZI shares could be range bound [near-term] and are downgrading to Neutral from Buy," McGinnis wrote in a note to clients.
ZoomInfo ( ZI ) expects first-quarter sales to be between $299M and $301M, lower than the $306.29M analysts were expecting. It also offered full-year guidance, saying it expects sales to be between $1.275B and $1.285B, below the $1.32B analysts were expecting.
Quarterly earnings are forecast to be between 21 and 22 cents, while full-year earnings are expected to be between 98 cents and $1 per share.
McGinnis added that the company said its guidance "embeds conservatism" as well as a worsening global economy, but there is worry that if the economy continues to get worse, the second-half of the year might be worse than initially thought.
Last month, Truist downgraded ZoomInfo Technologies ( ZI ) on worries over a cautious macro environment .
Analysts are largely cautious on ZoomInfo ( ZI ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Additionally, Seeking Alpha's quant system, which consistently beats the market, rates ZI a HOLD .
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ZoomInfo Technologies plunges on weak guidance, UBS downgrade