BofA reinstates Zoom at Buy with $130 target, flagging Anthropic stake as overlooked asset
ZM is in focus after Bank of America reinstated Zoom Communications at Buy with a $130 price objective, implying roughly 24% upside from the $104.71 price cited in the firm's research. Analyst Matt Bullock argues the…
Key takeaways
- Bank of America reinstated Zoom Communications at Buy with a $130 price objective, implying roughly 24% upside from the cited $104.71 price.
- BofA analyst Matt Bullock argues Zoom's Anthropic stake, which BofA values near $3 billion versus a $1.27 billion carrying value as of April 30, is an overlooked catalyst.
- In fiscal Q1 2027, Zoom reported revenue of $1.24 billion (up 5.5% year-over-year), enterprise net dollar expansion of 99%, and $521.6 million in operating cash flow.
- Zoom Phone crossed 10 million paid seats and Contact Center reached $100 million in annual recurring revenue, with BofA expecting total revenue growth to reach the mid-single-digit range.
- Microsoft bundling and consolidation onto Teams remains the central risk, with net dollar expansion crossing 100% in the next quarterly filing named as the key thesis test.
ZM is in focus after Bank of America reinstated Zoom Communications at Buy with a $130 price objective, implying roughly 24% upside from the $104.71 price cited in the firm's research. Analyst Matt Bullock argues the stock's post-pandemic reset has played out, and that an Anthropic stake BofA values near $3 billion, well above its balance sheet carrying value, is a catalyst investors may have overlooked. The next confirmable read is net dollar expansion in Zoom's subsequent quarterly filing.
The operating numbers
Zoom's fiscal first-quarter 2027 results give Bullock's thesis some ground to stand on. Revenue came in at $1.24 billion, up 5.5% year-over-year, with enterprise revenue growing 7.2%. Constant-currency growth reached 4.6%. Enterprise net dollar expansion improved to 99%, and BofA expects that measure to cross above 100% as customers layer on Phone, Contact Center, Workvivo, and AI products.
The newer product lines are posting real figures. Zoom Phone has crossed 10 million paid seats. Contact Center has reached $100 million in annual recurring revenue. Bullock expects both to push total revenue growth into the mid-single-digit range. Zoom ended April with roughly $7.7 billion in cash, equivalents, and marketable securities, and generated $521.6 million in operating cash flow during the quarter.
The Anthropic position
The less obvious piece of the bull case is Zoom's balance sheet. Zoom disclosed in its fiscal Q1 2027 10-Q that it added $46 million in Anthropic preferred stock during the quarter, bringing the carrying value of that position to $1.27 billion as of April 30. Total strategic investments stood at $1.88 billion.
BofA argues the carrying value understates the stake materially. Anthropic raised $65 billion in a Series H financing in May at a $965 billion post-money valuation. Adjusting for dilution, Bullock estimates Zoom owns roughly 0.311% of Anthropic, putting the estimated value of the position near $3 billion. That figure feeds directly into the $130 target alongside a 14.7 times calendar-year 2027 enterprise value-to-free-cash-flow multiple on the core communications business. Before accounting for Anthropic, ZM trades at roughly 13 times that multiple. Strip out the estimated $3 billion and the implied multiple on the core business falls to about 11 times, which is where BofA anchors its inexpensive argument.
What to watch
Microsoft remains the central risk. BofA's position is that the largest wave of enterprise consolidation onto Teams has largely run its course, leaving Zoom with a more durable base. Bullock still names Microsoft bundling, enterprise down-sells, online customer churn, and slower adoption of newer products as explicit risks. Contact Center faces entrenched competition, and Zoom has yet to prove that growing AI usage converts into paid revenue at scale. The next data point that tests the thesis is whether net dollar expansion crosses 100% in the next quarterly filing.
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