What Happened?
Shares of go-to-market intelligence provider ZoomInfo (NASDAQ: GTM) fell 4.4% in the afternoon session after Wells Fargo initiated coverage on the software company with an 'Underweight' rating. The bank and analyst Ryan Macwilliams set a price target of $10.00 for the stock. This new coverage was part of a broader initiation by Wells Fargo on 18 small and mid-cap software stocks, with the bank highlighting artificial intelligence as a major turning point for the sector. While several other companies received 'Equal Weight' ratings, ZoomInfo was singled out with the negative 'Underweight' assessment, indicating that the bank is less optimistic about its future performance compared to its peers.
The shares closed the day at $10.26, down 5.8% from previous close.
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What Is The Market Telling Us
ZoomInfo’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 20.6% on the news that the company reported fourth-quarter results that highlighted a notable improvement in large contract wins, but sales declined 2% year on year. Despite the revenue dip, cost efficiencies helped sustain an adjusted operating margin of 37%, contributing to adjusted earnings per share that exceeded Wall Street's expectations. Looking ahead, the company's full-year guidance for adjusted EPS also surpassed analysts' estimates, even as revenue is projected to decline. Overall, the quarter had a mix of positives and challenges; while revenue struggled, new contract wins, and better-than-expected earnings suggest resilience.
ZoomInfo is down 1.8% since the beginning of the year, and at $10.27 per share, it is trading 21.5% below its 52-week high of $13.08 from November 2024. Investors who bought $1,000 worth of ZoomInfo’s shares 5 years ago would now be looking at an investment worth $237.02.
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