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Piper Sandler analyst on key levels ahead of report

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It’s Zoom’s moment of truth.

The stay-at-home play will report earnings after the bell Monday, the next catalyst for a stock that has fallen out of favor this year after a nearly fivefold surge in 2020.

“I’m not sure if it’s Zoom or boom,” Craig Johnson, chief market technician at Piper Sandler, told CNBC’s “Trading Nation” on Friday. “The stock has had a huge run in 2020. It’s been basing now for months.”

In a separate email to CNBC, Johnson said the options market is implying a 9% move on the upside or downside, major action for a stock that has stalled in recent months. Zoom has not seen a move of that size since March.

Johnson says it pays to have a wait-and-see approach to this stock.

“I’m going to wait for the stock to see if we can recapture this 50- and 200-day moving average, technically. Even though our fundamental analyst likes it, I’m going to wait to see if we can get back above that level at about $365 so I’m a hold on this heading into the print,” he said.

Zoom closed Friday at $340.81. The stock would need to gain 7% to reach that level.

But, Federated Hermes portfolio manager Steve Chiavarone sees a big headwind ahead for Zoom and other stay-at-home stocks like it.

“All indications appear to be pointing towards delta potentially peaking and we think as soon as those cases start to peak, stocks are going to sniff that out and the reopening trades – things like casinos, things like hotels, things like airlines – are going to get a big relief rally. That’s where we find more opportunity,” he said during the same interview.

Zoom is expected to report $1.16 a share in profit in its July-ended second quarter, according to FactSet estimates, up from 92 cents a share a year earlier. Sales are forecast to have risen almost 50%.

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