HomeMarket NewsZscaler: Wall Street Rides Wave of Deal Momentum Despite Billing Forecast Buzzkill

Zscaler: Wall Street Rides Wave of Deal Momentum Despite Billing Forecast Buzzkill

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Cybersecurity company Zscaler (NASDAQ:ZS) watched as its premarket losses dissipated and its stock hugged the flat line on Tuesday following first-quarter results that exceeded expectations. Despite a bit of a letdown in the billing forecast, Wall Street noted the companyโ€™s impressive deal momentum.

Wall Street Takes Notice

A team of Wedbush Securities analysts, led by Dan Ives, applauded Zscalerโ€™s execution and indicated that the company is successfully balancing aggressive growth with cost management. The analysts viewed Zscalerโ€™s decision to maintain its billings guidance for fiscal 2024 as being โ€œconservativeโ€ and setting a โ€œprudent bar.โ€

Additionally, BMO Capital Markets analyst Keith Bachman raised his price target to $200, characterizing the results as โ€œreasonable.โ€ Mizuho Securities analyst Gregg Moskowitz reiterated his buy rating and $205 price target, affirming that Zscaler is well positioned for growth.

Looking to the Future

Zscalerโ€™s second-quarter guidance showed confidence, with expected revenue above the consensus estimate and adjusted earnings forecasted to surpass the estimates. Full-year revenue projections also exceeded the consensus estimate, instilling further optimism in the companyโ€™s performance.

Moreover, Zscaler announced new management appointments, with Mike Rich named Chief Revenue Officer and Joyce Kim as Chief Marketing Officer.

Market Reaction and Anticipation

The market response to Zscalerโ€™s results was less enthusiastic than anticipated, with shares of other cybersecurity stocks experiencing modest declines in premarket trading. The fate of other players in the industry, including Palo Alto Networks (PANW), CyberArk (CYBR), Fortinet (FTNT), and CrowdStrike Holdings (CRWD), hung in the balance awaiting the outcome of CrowdStrikeโ€™s quarterly results, due after trading on Tuesday.

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