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Investing.com - B.Riley initiated coverage on Zscaler (NASDAQ:ZS), a cybersecurity company with a $42 billion market cap and impressive 25% year-over-year revenue growth, with a Neutral rating and a price target of $275.00 on Tuesday.
The research firm identifies Zscaler as a strong leader in multiple high-growth secure access markets, noting its SaaS-based cloud cybersecurity services enable customers to securely connect users, devices, and applications from any location. The company’s strong market position is reflected in its industry-leading 77.5% gross profit margins, according to InvestingPro data.
B.Riley highlights Zscaler’s proprietary technology platform, which it says is differentiated by scalability and ability to perform multiple cybersecurity services, alongside strong sales execution that attracts new accounts while expanding into its large and underpenetrated installed base.
Despite these strengths, the firm points to an intense competitive landscape where larger platform providers leverage product breadth and global distribution, while emerging vendors remain agile with differentiated technology.
B.Riley concludes that Zscaler stock, which has outperformed the broader cybersecurity sector in recent months, is fairly valued, trading at an earnings multiple approximately in line with comparable cybersecurity leaders on both absolute and adjusted bases after accounting for earnings growth.
In other recent news, Zscaler has announced the pricing of $1.5 billion in convertible senior notes due 2028, aimed at qualified institutional buyers. These zero-interest notes have a conversion rate set at 2.2752 shares per $1,000 principal amount, translating to a conversion price of approximately $439.52 per share. JMP Securities has reiterated its Market Outperform rating for Zscaler and raised its price target from $310 to $355, following investor meetings with key company figures. Cantor Fitzgerald has also maintained its Overweight rating with a $340.00 price target, citing strong early results from Zscaler’s new Z-Flex program. This program, launched in the third quarter, has already generated $65 million in total contract value bookings, showcasing rapid customer adoption. These developments highlight Zscaler’s ongoing strategic initiatives and market performance.
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