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Bank of America see significant upside ahead of hot AI stock LegalZoom . Analyst Michael McGovern upgraded the online legal services provider from underperform to buy and raised his price target by $4 to $12. His new target on the stock — which already is up 11.5% this year — suggests shares can jump 43%. Management “has executed a substantial portion of the shift toward Subscriptions, while also adding strategic AI collaborations,” McGovern said in a Friday note as a top reason for his upgrade. McGovern highlighted LegalZoom’s new partnerships with searchbots Perplexity and OpenAI’s ChatGPT agent as moves that “create a new funnel of throughput” as AI usage simultaneously accelerates the use of legal services online. The collaborations also underscore the shifting role of AI as a longer-term opportunity for LegalZoom, even though an AI-native competitor could still be a threat to its business, he said. Another strong catalyst for LegalZoom’s growth is its opportunity to see accelerating subscription growth, which has been in part due to bundling and strong renewal rates. “LZ can likely sustain double-digit subscription revenue well into next year, as revenue growth has significantly exceeded our expectations,” McGovern said. “ARPU will also become a bigger contributor to Subscription Revenue growth function next year.” LZ 1Y mountain LegalZoom stock over the past year. BofA remains positive on the stock story moving ahead, and believes LegalZoom can see multiple expansion given its already discounted multiple and solid free cash flow trajectory.
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