Microvast Holdings announces departure of chief financial officer
On Friday, KeyBanc Capital Markets updated its outlook on Zscaler (NASDAQ:ZS), increasing the price target to $310 from $290 while maintaining an Overweight rating on the stock. The cybersecurity company, currently valued at $38.85 billion, has shown remarkable momentum with a 39% gain year-to-date. According to InvestingPro data, the stock is trading near its 52-week high of $259.40, suggesting strong market confidence in its growth trajectory. The adjustment follows Zscaler’s strong performance in the third fiscal quarter, which surpassed the sluggish security prints observed in April. The firm’s billings exceeded expectations by $24 million, aligning with the trailing twelve months’ average.
According to KeyBanc analyst Eric Heath, Zscaler’s management reported no changes in the macro environment, a notable difference from its peers. For the fourth fiscal quarter, guidance was provided that closely matched expectations in terms of revenue, billings, and margins. The company’s impressive gross profit margin of 77.45% and robust revenue growth of 25.46% year-over-year underscore its operational efficiency. InvestingPro analysis reveals 13 additional key insights about Zscaler’s performance and potential. Heath highlighted Zscaler’s strategic acquisition of Red Canary, which complements its previous Avalor purchase. This move is aimed at creating a data fabric that allows customers to enhance or substitute a Security Information and Event Management (SIEM) system without the need to transmit all logs to a data lake. Management indicated that Zscaler’s network logs offer high fidelity and volume, sparking a renewed discussion on the strategic importance of endpoint versus network logs.
The anticipated contribution of Red Canary to Zscaler’s reported $140 million Annual Recurring Revenue (ARR) is about half, as the company plans to phase out aspects that do not align with its enterprise customer base. Additionally, Zscaler has launched Z-Flex, a more flexible credit model designed to encourage broader platform adoption, mirroring recent initiatives by industry peers.
Furthermore, Kevin Rubin was announced as the new Chief Financial Officer of Zscaler. KeyBanc’s positive outlook is fueled by the strong momentum in the Secure Access Service Edge (SASE) market, Zscaler’s expanding portfolio of emerging products for cross-selling, and a seasoned go-to-market leadership team engaging with C-suite executives. Following the third fiscal quarter results, KeyBanc has slightly increased its revenue, billings, free cash flow, and earnings per share estimates for the fiscal years 2025 to 2027, leading to the raised price target. With analyst targets ranging from $196 to $315 and an overall financial health score of "GOOD" from InvestingPro, investors seeking deeper insights can access comprehensive analysis and valuation metrics through InvestingPro’s detailed research report, available alongside 1,400+ other top US stocks.
In other recent news, Zscaler has reported a strong third-quarter performance for fiscal year 2025, with a 23% year-over-year revenue increase to $678 million and a 25% rise in calculated billings to $785 million. The company has also achieved an annual recurring revenue (ARR) of $2.9 billion, marking a 23% growth for the third consecutive quarter. Zscaler’s operating margins reached 21.6%, and its free cash flow exceeded expectations by 14%. Analysts from firms like Needham, Rosenblatt, Cantor Fitzgerald, Mizuho (NYSE:MFG), and UBS have responded positively, with several raising their price targets and maintaining Buy ratings. Notably, Needham raised its target to $310, Rosenblatt and UBS to $315, while Cantor Fitzgerald set a target of $290. Mizuho, though raising its target to $275, maintained a Neutral rating, citing cautious optimism due to competitive market conditions. The company is also poised to acquire Red Canary for $675 million, a move expected to enhance its cybersecurity offerings. These developments underscore Zscaler’s strategic momentum and its focus on expanding its platform and customer base.
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