The bull case for Zoom Video is still intact even as many workers have returned to offices, according to Morgan Stanley. Analyst Meta Marshall upgraded the stock to overweight from equal weight, saying in a note to clients on Thursday that the market is too cautious on Zoom's growth prospects. "Investor concerns on [small and medium business] churn are outweighing continued growth potential of enterprise business, particularly as platform expands. We believe growth over the next year is likely to surprise to the upside, causing us to move to OW," the note said. Zoom Video became one of the main stocks associated with the work-from-home trade in 2020, but the name has struggled since peaking in October of last year. The shares have hit another downtrend recently, falling more than 12% since the end of June even as the broader market has continue to march toward a string of record highs. Zoom is set to release results for its fiscal second quarter on Monday, and that could help create a near-term boost for the stock, Morgan Stanley said. "While we think that Zoom is certainly building a durable platform for growth, our call is less on the multiyear durability of the platform or LT competition threats and more about overdone concerns currently on SMB churn against a backdrop of investors who want to be more positive," the note said. Morgan Stanley raised its price target on Zoom Video to $400 per share from $360. The new target represents upside of 18% from where the stock closed Wednesday. -- CNBC's Michael Bloom contributed to this report. Correction: Morgan Stanley's new target represents upside of 18% from where the stock closed Wednesday. An earlier version misstated the day.
Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., center, reacts while ringing the opening bell during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, April 18, 2019. Zoom reported net income of $7.6 million on revenue of $331 million for the year ended January, and is now worth nine times the $1 billion valuation it secured after a funding round two years ago.