LegalZoom.com (NASDAQ:LZ) Stock Falls 8.8% on Analyst Downgrade

Key Points

• LegalZoom shares fell 8.8% after JPMorgan cut its price target from $7 to $6 while maintaining a neutral rating; the stock traded around $5.43.
• Analyst sentiment is broadly cautious: MarketBeat reports an average “Reduce” rating and a $7.10 consensus price target, with five analysts rating the stock Hold and four Sell. Bank of America also downgraded shares to Underperform.
• Third-quarter revenue rose 2.6% year over year to $195.15 million, slightly beating estimates, while EPS of $0.19 matched consensus. However, business-formation volume declined 13% to 110,000, raising concerns about demand.

LegalZoom.com, Inc. (NASDAQ:LZ - Get Free Report)'s stock price traded down 8.8% during trading on Friday after JPMorgan Chase & Co. lowered their price target on the stock from $7.00 to $6.00. JPMorgan Chase & Co. currently has a neutral rating on the stock. LegalZoom.com traded as low as $5.46 and last traded at $5.4250. Approximately 900,471 shares traded hands during mid-day trading, a decline of 70% from the average session volume of 2,986,663 shares. The stock had previously closed at $5.95.

Several other research firms have also recently issued reports on LZ. William Blair cut shares of LegalZoom.com from an "outperform" rating to a "market perform" rating in a research note on Thursday, August 6th. Bank of America cut shares of LegalZoom.com from a "buy" rating to an "underperform" rating in a research note on Thursday. Wall Street Zen upgraded LegalZoom.com from a "hold" rating to a "buy" rating in a research note on Saturday, September 26th. Finally, Weiss Ratings downgraded shares of LegalZoom.com from a "hold (c-)" rating to a "sell (d+)" rating in a research note on Thursday, October 29th. Five equities research analysts have rated the stock with a Hold rating and four have issued a Sell rating to the stock. Based on data from MarketBeat, LegalZoom.com presently has an average rating of "Reduce" and a consensus price target of $7.10.

Insider Buying and Selling at LegalZoom.com

In related news, CFO Noel Watson sold 416,371 shares of the business's stock in a transaction on Thursday, August 20th. The stock was sold at an average price of $5.91, for a total transaction of $2,460,752.61. Following the transaction, the chief financial officer directly owned 1,491,430 shares in the company, valued at $8,814,351.30. The trade was a 21.82% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, insider Nicole Miller sold 43,996 shares of the company's stock in a transaction dated Monday, August 17th. The shares were sold at an average price of $5.51, for a total transaction of $242,417.96. Following the transaction, the insider owned 976,932 shares in the company, valued at approximately $5,382,895.32. This trade represents a 4.31% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last 90 days, insiders have sold 577,475 shares of company stock worth $3,375,197. 7.40% of the stock is owned by company insiders.

More LegalZoom.com News

Here are the key news stories impacting LegalZoom.com this week:

• Positive Sentiment: Third-quarter revenue was $195.15 million, slightly above the $193.83 million consensus and up 2.6% year over year. EPS of $0.19 met the reported consensus, and profit increased from $0.17 a year earlier. Quarterly earnings results
• Neutral Sentiment: LegalZoom forecast $180 million to $185 million in adjusted EBITDA for fiscal 2026, while noting pressure from search and planned investments. Fiscal 2026 EBITDA outlook
• Negative Sentiment: Business-formation volume fell 13% year over year to 110,000, a demand concern. Human-in-the-loop subscriptions contributed 49% of third-quarter revenue, but did not offset the formation decline. Long-term investor takeaways
• Negative Sentiment: Bank of America cut its rating from “buy” to “underperform.” JPMorgan lowered its price target from $7 to $6 and assigned a “neutral” rating, signaling reduced analyst confidence. Bank of America rating information JPMorgan rating information
• Negative Sentiment: The stock crossed below its 200-day moving average following the downgrade, a technical signal that may add to near-term selling pressure. Stock crosses below 200-day moving average

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in LZ. State Street Corp lifted its position in shares of LegalZoom.com by 3.0% during the 2nd quarter. State Street Corp now owns 4,552,468 shares of the company's stock valued at $27,907,000 after buying an additional 132,761 shares in the last quarter. Dimensional Fund Advisors LP grew its position in shares of LegalZoom.com by 3.0% in the first quarter. Dimensional Fund Advisors LP now owns 3,112,895 shares of the company's stock valued at $17,650,000 after purchasing an additional 91,131 shares during the period. Punch & Associates Investment Management Inc. boosted its holdings in LegalZoom.com by 6.0% in the 2nd quarter. Punch & Associates Investment Management Inc. now owns 2,850,501 shares of the company's stock worth $17,474,000 after buying an additional 161,231 shares during the last quarter. Bank of America Corp DE increased its position in shares of LegalZoom.com by 187.4% during the first quarter. Bank of America Corp DE now owns 2,509,891 shares of the company's stock worth $14,231,000 after purchasing an additional 1,636,487 shares in the last quarter. Finally, Principal Financial Group Inc. boosted its stake in LegalZoom.com by 579.1% during the 1st quarter. Principal Financial Group Inc. now owns 1,010,914 shares of the company's stock worth $5,732,000 after purchasing an additional 862,045 shares during the last quarter. Hedge funds and other institutional investors own 81.99% of the company's stock.

LegalZoom.com Price Performance

The firm has a market cap of $929.11 million, a PE ratio of 45.30, a price-to-earnings-growth ratio of 1.30 and a beta of 1.16. The stock's fifty day moving average price is $6.16 and its 200-day moving average price is $6.52.

LegalZoom.com (NASDAQ:LZ - Get Free Report) last released its earnings results on Wednesday, November 4th. The company reported $0.19 earnings per share for the quarter, hitting analysts' consensus estimates of $0.19. LegalZoom.com had a net margin of 2.56% and a return on equity of 23.09%. The business had revenue of $195.15 million for the quarter, compared to analyst estimates of $193.83 million. During the same period last year, the company posted $0.17 EPS. The business's revenue was up 2.6% on a year-over-year basis. On average, sell-side analysts anticipate that LegalZoom.com, Inc. will post 0.32 earnings per share for the current fiscal year.

LegalZoom.com Company Profile

LegalZoom.com, Inc is an online platform that provides legal, compliance and tax-related products and services to individuals, families and small businesses. The company's platform is designed to make common legal and administrative processes more accessible through digital tools, guided services and access to independent professionals.

LegalZoom's offerings include business formation services for limited liability companies and corporations, registered-agent services, annual compliance support, business licensing and trademark services.

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