Wall Street Looks Again at LegalZoom: BofA’s Endorsement Reframes Growth Narrative

LegalZoom.com, Inc. (LZ), the leading online platform for business formation and legal services, has just received a notable upgrade from BofA Securities—one of Wall Street’s largest and most influential investment banks. Moving LegalZoom from “Underperform” to “Buy” and assigning a new price target of $12 (up from an unspecified lower level), BofA’s action comes on the heels of robust Q2 earnings and raised 2025 revenue guidance. For investors tracking analyst upgrades as a signal of institutional conviction, this is a notable inflection point: BofA’s call could catalyze fresh momentum, with the new price target suggesting meaningful upside from current levels.

Key Takeaways

• Potential upside of about 10%: BofA’s $12 target is ~10% above LegalZoom’s recent $10.90 price.

• Stock has surged to 52-week highs: LegalZoom hit $11.36 after earnings, marking a sharp 30% gain from recent lows.

• Q2 beat and guidance raise drive sentiment: LegalZoom met EPS estimates, raised 2025 revenue growth targets, and reported strong Q2 results.

• BofA’s upgrade adds heavyweight conviction: The move from a top-tier firm signals rising institutional confidence.

• Bullish technicals confirmed: RSI over 73 and price breaking above upper Bollinger Band reflect strong momentum.

The BofA Upgrade: Unpacking Analyst Conviction

BofA Securities, a global powerhouse in equity research and capital markets, rarely makes abrupt pivots—especially from "Underperform" to "Buy." The bank’s analysts cited improved financial execution and LegalZoom’s accelerating client acquisition as key drivers behind the upgrade. BofA’s influence on Wall Street is formidable, with its research often moving markets and shaping institutional sentiment. Their upgrade, paired with a $12 price target, reflects a recalibration of LegalZoom’s risk/reward—an endorsement that could prompt other funds to re-evaluate their exposure. Such a sharp upgrade from an influential firm underscores a material change in the company’s prospects, not just incremental improvement.

“We see LegalZoom’s recent execution and upgraded guidance as structurally significant, not just cyclical,” BofA’s note reportedly stated (source: firm commentary).

LegalZoom’s Business Model: A Digital Legal Pioneer

LegalZoom is a technology-driven legal platform empowering small businesses and individuals to form companies, access legal documents, and connect with legal professionals entirely online. This asset-light, recurring-revenue model benefits from secular trends in business digitization and the ongoing shift to online legal solutions. LegalZoom monetizes via subscription services, transaction fees, and ancillary products, giving it a sticky, diversified revenue base.

Financial Performance: Q2 Results Ignite the Turnaround

LegalZoom’s Q2 2025 report, released August 7, showcased:

• EPS of $0.15, matching consensus and up from $0.10 a year ago.

• Revenue outperformance, with year-over-year growth exceeding expectations.

• Raised full-year guidance for 2025 revenue, signaling management’s confidence in sustained momentum.

• Strong cash flow and expanding operating margins, reflecting improved scale and customer retention.

These results capped a string of operational improvements and investments in AI-powered legal solutions, positioning LegalZoom as a leader in the evolving legal-tech space.

Stock Price Surge: Technicals Confirm the Bullish Story

LegalZoom’s shares have leapt from a 52-week low of $5.57 to a recent high of $11.36—the latter achieved just after the Q2 earnings release. The stock’s current price of $10.90 marks a 30% rally from its July lows. Volume has spiked meaningfully, with the largest single-day turnover seen post-earnings.

Technical indicators reinforce the bullish case:

• RSI at 73: Suggests strong momentum, though approaching overbought territory.

• Price broke above upper Bollinger Band: Signals a breakout on high volume, often a hallmark of institutional buying.

• VWAP and moving averages: The 20-day EMA and SMA are both below current price, confirming the uptrend.

Potential Upside: What BofA’s $12 Target Means for Investors

With LegalZoom trading at $10.90, BofA’s $12 price target implies about 10% further upside from current levels. Given the stock’s recent surge, this target is less about a quick trade and more about confidence in LegalZoom’s growth runway and margin expansion. For context, the stock’s 52-week high was just set, so BofA’s target suggests the firm sees room for further re-rating as LegalZoom delivers on its guidance.

Recent News: Catalysts Driving the Upgrade

The past 30 days have been pivotal for LegalZoom:

• Q2 earnings met expectations, but revenue and guidance exceeded Street forecasts (Zacks).

• Management raised full-year revenue expectations for 2025 (GlobeNewsWire), citing robust new client growth and higher attach rates for premium legal services.

• Analysts have praised LegalZoom’s product innovation, especially its integration of AI to drive new service offerings (Zacks).

Broader Sector Dynamics: Legal-Tech’s Moment

LegalZoom’s momentum is not isolated. The broader legal-tech sector is benefiting from:

• Increased digitization post-pandemic.

• SMB formation rates at multi-year highs.

• Growing acceptance of online legal platforms by both consumers and professionals.

LegalZoom, as a first-mover with brand recognition and network effects, is well positioned to consolidate share as the industry matures.

Risk Factors and Watchpoints

• The recent technical breakout puts LegalZoom in overbought territory—short-term volatility should be expected.

• Competitive pressure from newer SaaS legal solutions could compress margins longer-term.

• Any faltering in client acquisition or subscription growth could quickly impact sentiment, given the stock’s sharp rally.

Analyst Confidence: The Weight of BofA’s Call

BofA Securities’ size, track record, and sector coverage make its research highly influential. Their upgrade from Underperform to Buy—skipping the neutral rung—signifies conviction that LegalZoom’s transformation is both real and underestimated by the market. This move aligns with LegalZoom’s improving fundamentals and technical breakout, giving the upgrade added credibility and potential to catalyze further institutional buying.

Conclusion: LegalZoom’s Inflection—Is the Re-Rating Just Beginning?

LegalZoom’s latest quarter marked a critical turning point, as evidenced by its surging stock price and BofA’s heavyweight upgrade. With robust operational momentum, a raised outlook, and technical confirmation, the stock’s story has shifted from turnaround to growth. For investors, the new $12 target offers a clear north star—one that’s grounded in both improving fundamentals and institutional conviction. The next test will be LegalZoom’s ability to sustain these gains and continue out-executing in a competitive market. For now, the market—and BofA—is betting that the best is yet to come.