Zoom Video (ZM) is expected to report results on its second quarter on Monday, August 22, with a conference call scheduled for 5:00 pm EDT. What to watch for:

INCREASING COMPETITION: Last week, Citi analyst Tyler Radke downgraded Zoom Video to Sell from Neutral with a $91 price target. The analyst told investors that he sees new hurdles to Zoom sustaining growth, including rising competition from Microsoft's (MSFT) Teams and macro-related weakness hitting small-to-mid size businesses. Radke believes increasing churns in SMB and online users and rising competitions in Enterprise will more than offset new product strength and drive estimates below consensus. He also made "significant cuts" to his own estimates for Zoom.

ATTRACTIVE ENTRY POINT: More bullish on the name, MKM Partners analyst Catharine Trebnick initiated coverage of Zoom Video earlier this month with a Buy rating and $135 price target. The stock is down 30% year-to-date due to multiple compression across the software market and the company's management guiding to slower year-over-year growth post-pandemic, but this has created an attractive entry point, the analyst told investors in a research note. Beyond 2022, there are several key catalysts that should boost Zoom Video growth back up to 20% - ahead of its conservative full year 2023 guidance range of 10.5% to 11% - including strong execution on product expansion and upselling into its Enterprise segment customers, Trebnick added.

Last month, Bernstein analyst Peter Weed also started coverage of Zoom Video but with a Market Perform rating and $122 price target. The analyst said that while post-COVID growth sounds risky, he believes competitive concerns are overblown. Weed added that he believes Zoom has less recession risk than some other vendors.

OUTLOOK: During the company’s last earnings call, Zoom Video said it saw second quarter earnings per share of 90c-92c, with consensus at 92c, and revenue of $1.115B-$1.120B. The company also raised its full year 2023 earnings per share view to $3.70-$3.77 from $3.45-$3.51, and backed full year 2023 revenue view of $4.53B-$4.55B.

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