The company received an outperform rating from RBC analyst Rishi Jaluria, who described Zoom as a buy. Clients that rely on bigger corporate customers will see the company’s platform remaining an important component of work life in the future, according to a message Jaluria sent to clients on Thursday evening.
“The future of work will likely be hybrid and we believe Zoom will be a critical component to enabling that future. We would argue that hybrid and distributed work is a tougher problem to solve than all employees working remote, as meetings will happen across devices (e.g. laptops, mobile phones, hardware meeting rooms),” the note said.RBC set a price target of $450 per share for Zoom, which is nearly 30% above where the stock closed on Thursday.Zoom has rolled out a phone product and has other projects that should expand the business beyond pure video conferencing. That iteration, combined with high quality, will help Zoom carve out a permanent roll despite deep-pocketed competitors.“While we are not dismissive of competition, especially from giants like Microsoft and Google, we view Zoom’s video conferencing as being meaningfully differentiated on its reliability, scalability, and ease-of-use. We believe this and the critical nature of video conferencing will be enough to hold off ‘good enough’ competition, particularly from Microsoft Teams,” the note said.
S&P expected to reach new heights
Thursday’s S&P 500 was up by 0.3%. Over the last month, the broad equity index (also known as the Dow Jones Industrial Average) has risen nearly 1% vs an approximately 4% rise for the NASDAQ-composite.Cashin, the director of floor operations for UBS at the New York Stock Exchange, said he is looking for signs of strong buying pressure to help sustain the S&P 500′s upward trend.“You’d like to believe that when you punch through the upside of a market pattern, it inspires both breakout buying and, in some cases, short covering, so you should see a kind of burst after you move out,” Cashin explained. “There hasn’t been a burst yet, and without one, you’ve got to say the moves are a little suspect.”Following Thursday’s hotter-than-expected reading on May consumer prices, the latest data point showing inflationary pressures across the economy, the Wall Street veteran also weighed in on the bond market.The benchmark 10-year Treasury yield remained stable on Thursday, hovering around 1.49 percent. Yields, which move in the opposite direction of prices, have been trending lower in recent weeks after peaking at 1.7 percent about a month ago.According to Cashin, a critical yield level to watch is 1.35 percent.
“If any of these disinflationary or deflationary moves become apparent, I will have to back down. “I believe we will begin to move lower again,” Cashin said, noting that some commodities, such as lumber, have already begun to cool.
If the 10-year yield falls all the way back to 1.35 percent and “we move through it,” “that will tell me that there is something going on here, that people are saying, ‘Inflation?'” No, it does not. ‘Not at all,’ said Cashin. “We are transitioning from transitory to possibly deflationary conditions. Out there, the question is wide open.”