HomeMarket NewsThe Great Zscaler Debate: 12 Analyst Insights Unveiled

The Great Zscaler Debate: 12 Analyst Insights Unveiled

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Zscaler Inc, with ticker symbol ZS, sent shockwaves through premarket trading on Friday with its announcement of stellar sales and earnings for the fiscal second quarter.

Amid an exhilarating earnings season, let’s delve into the pearls of wisdom shared by 12 Wall Street analysts following the release.

  • Goldman Sachs analyst Gabriela Borges maintains a Neural rating and raises the price target from $189 to $215.
  • Wedbush analyst Daniel Ives sticks with an Outperform rating but boosts the price target from $250 to $260.
  • RBC Capital Markets analyst Matthew Hedberg stands by an Outperform rating, elevating the price target from $260 to $265.
  • Cantor Fitzgerald analyst Yi Fu Lee reiterates a Neutral rating and trims the price target from $250 to $230.
  • BMO Capital Markets analyst Keith Bachman maintains an Outperform rating while lowering the price target from $268 to $255.
  • Piper Sandler analyst Rob Owens reaffirms an Overweight rating with a price target of $255.
  • Stifel analyst Adam Borg also reiterates a Buy rating and maintains a price target of $270.
  • Scotiabank analyst Patrick Colville sustains a Sector Outperform rating and a price target of $250.
  • JMP Securities analyst Trevor Walsh confirms a Market Outperform rating and keeps the price target at $270.
  • Truist Securities analyst Joel Fishbein assures a Buy rating and maintains the price target at $260.
  • KeyBanc Capital Markets analyst Eric Heath retains a Sector Weight rating on the stock.
  • Needham analyst Alex Henderson sustains a Strong Buy rating with a price target of $290.

Curious about other analyst stock ratings? Explore away.

Goldman Sachs: Zscaler’s quarterly billings and margins surpassed Street expectations, according to Borges. The management’s upward revisions for billings and operating income forecast for fiscal 2024 inspired confidence.

The analyst hinted at concerns regarding the deceleration in billings growth pace in a shifting competitive setting, leading to premarket anxieties.

Wedbush: Ives described Zscaler’s triumph in outperforming on top and bottom lines and maintaining impressive margin discipline. Despite conservative full-year guidance, the company’s pronounced strength in the field during scrutiny bodes well for future prospects.

The analyst emphasized Zscaler’s prominence in cloud cybersecurity, anticipating further acceleration in the sector over the next decade.

RBC Capital Markets: Hedberg commended the company’s momentum in the quarter, highlighting broad-based outperformance and notable profitability.

Despite macro hurdles and market evolution, Zscaler raised guidance across all metrics while maintaining prudence in navigating shifts in go-to-market strategies.

Cantor Fitzgerald: Lee acknowledged Zscaler’s positive performance in various aspects, with revenue, billings, operating income, and free cash flows all surpassing expectations.

Sequential weakness in F3Q24 billings growth weighed on the stock, attributed to historical seasonality trends.

BMO Capital Markets: Bachman noted a healthy billings growth for Zscaler, albeit at a slower 27% year-on-year rate, down from 34% in the previous quarter.

The analyst highlighted the significant impact of ZS’s federal business on billings, pointing to new selling programs as potential drivers of commercial growth in the long run.

Piper Sandler: Owens celebrated Zscaler’s superior F2Q performance, driven by robust sales, a fruitful federal quarter, and record new customer acquisitions.

Despite macro uncertainties and shifts in sales leadership, the analyst viewed the post-market selloff as a promising buy-in opportunity.

Stifel: Borg praised the company’s overall beat in key metrics during the fiscal second quarter, pointing to expanding traction across Zscaler’s offerings and strong performance in large customer segments.

Management’s increased guidance for fiscal 2024 exceeded expectations, with a prudent approach mitigating concerns over leadership changes.

Scotiabank: Colville lauded Zscaler’s robust performance, surpassing expectations on key metrics and raising F24 billings growth estimates.

Management’s guidance adjustments were viewed favorably, indicating a healthy demand environment and unwavering customer trust in cybersecurity solutions.

JMP Securities: Walsh commended Zscaler’s solid quarter, backed by impressive non-GAAP earnings and revenue that outstripped consensus estimates.

Anticipating Zscaler’s trajectory towards $5 billion in ARR, the analyst hinted at potential business adjustments to accommodate future growth and scalability.

Truist Securities: Fishbein applauded Zscaler’s resilient momentum in 2FQ24, navigating a challenging macro milieu while striking a balance between growth and profitability.

The analyst attributed guidance nuances to sales leadership transitions rather than demand weakness, citing strong multi-year deal signings as a testament to customer confidence.

Needham: Henderson praised Zscaler’s flawless execution amidst a shift towards account-centric selling, led by a new Sales leader from Service Now.

The analyst lauded Zscaler’s strong quarter and optimistic full-year forecast, noting management’s unwavering confidence during recent interactions.

KeyBanc: Heath highlighted Zscaler’s robust growth in the Federal vertical, dispelling concerns of slowdown and affirming continuous momentum, particularly in government agencies.

Despite solid F2Q results, potential doubts linger regarding Palo Alto’s comments on cybersecurity spending fatigue and aggressive discounting strategies targeted at endpoint/XDR initiatives.

ZS Price Action: Zscaler’s shares witnessed a 5.86% decline to $227.78 in premarket trading on Friday.

Explore further: Palo Alto Networks Shares Shake ‘Spending Fatigue’ Claims As Investors Remain Bullish On Cybersecurity

Image: Shutterstock

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