On Tuesday, BMO Capital Markets updated its outlook on Zscaler (NASDAQ:ZS), a leader in cloud security solutions with a market capitalization of $30.49 billion. The firm raised its price target on the company's stock to $222 from the previous $197, while reaffirming its Outperform rating.
According to InvestingPro data, the stock is currently trading near its Fair Value, with analysts' targets ranging from $177 to $270. This adjustment follows Zscaler's recent earnings report, which revealed a modest surpassing of billings estimates for the October quarter.
The company's updated financial guidance for fiscal year 2025 was also a factor in the revised price target. Zscaler increased its forecast by an amount equivalent to the billings beat, indicating a positive outlook for the company's future performance. The new price target suggests a 16% potential upside from the stock's after-hours trading price of approximately $192.
Despite the positive financial results, BMO Capital acknowledges that the near-term market response to Zscaler's report could be influenced by the announcement of the Chief Financial Officer (CFO)'s retirement. The CFO, Mr. Canessa, is 67 years old, and his decision to retire is seen as appropriate and understandable given his age.
BMO Capital's analyst commented on the price target increase, stating, "We are raising our target price to $222. With the stock trading at about $192 after hours, our target represents 16% potential upside. We retain our Outperform rating." This statement underscores the firm's continued confidence in Zscaler's stock performance.
Investors may weigh the implications of the CFO's retirement against the company's robust financial results and raised guidance. Nonetheless, the firm's maintained Outperform rating and raised price target reflect a positive view of Zscaler's market position and its potential for growth. The stock has delivered a strong 23.36% return over the past six months. For deeper insights into Zscaler's financial health and growth prospects, including additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Zscaler, a leader in cloud security, has been the subject of several significant updates. The company's first-quarter billings showed a growth of over 20%, and the company reported a revenue growth of 34.07%, surpassing its own guidance. RBC Capital Markets reiterated an Outperform rating on the company's stock, with a price target set at $230.00, while KeyBanc Capital Markets raised its price target on Zscaler's stock to $250, and Piper Sandler raised its target to $235.
However, Loop Capital adjusted its price target for Zscaler from $200 to $195, citing risks associated with the company's high billing growth expectations and the announced retirement of the Chief Financial Officer. Citi maintained a Buy rating on Zscaler and increased the price target to $235 from $230 after the company's strong first-quarter performance. The company's robust financial performance has also been recognized by other analyst firms such as Scotiabank (TSX:BNS), Canaccord Genuity, and Truist Securities, who have all reiterated positive ratings and raised their price targets.
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