Microvast Holdings announces departure of chief financial officer
On Friday, Stifel analysts, led by Adam Borg, increased their price target on Zscaler shares (NASDAQ:ZS) to $270 from the previous target of $235, while reiterating a Buy rating on the stock. The cybersecurity company, currently valued at $38 billion, is trading near its 52-week high of $247.28. The adjustment comes ahead of Zscaler’s third-quarter fiscal year 2025 results, which are scheduled to be released after the market closes on Thursday, May 29. According to InvestingPro, the stock has shown impressive momentum with a 36% year-to-date return.
The Stifel team highlighted several reasons for their positive outlook, including robust mid-quarter checks, stronger end-of-quarter checks, and a history of the company exceeding expectations. Supporting this optimism, InvestingPro data shows Zscaler maintains impressive gross profit margins of 78% and strong revenue growth of 28% over the last twelve months. They anticipate that the upcoming earnings report will generate discussions on various topics such as demand trends, vertical performance, federal market traction, and fiscal year 2025 guidance. Analysts are also looking to see if Zscaler will provide early insights into fiscal year 2026.
Furthermore, the focus is expected to be on Zscaler’s Zero Trust Everywhere initiative, potential firewall refresh opportunities, the status of the Chief Financial Officer search, go-to-market progress, and the adoption trends of newer products like Data Protection and AI. Competition within the industry is another area that will likely be examined.
Despite indications of a strong quarter, Stifel analysts predict that Zscaler might only reaffirm its guidance for fiscal year 2025 or adjust it modestly to align with the quarter’s performance. This conservative approach is attributed to the fact that the July quarter marks Zscaler’s fiscal year-end, combined with the ongoing volatility in the macroeconomic environment.
Stifel’s report also noted the stock’s recent performance, with shares having increased by 24% quarter-to-date and 36% year-to-date, outpacing the Nasdaq’s gains of 10.5% and a decrease of 1%, respectively. The analysts expressed curiosity about whether the reaffirmed or slightly raised guidance would be sufficient to drive the stock price higher after the earnings release, especially considering the growing short interest in the shares.
In other recent news, Zscaler has reported significant financial achievements and received positive evaluations from various analyst firms. TD Cowen noted a 23% increase in Zscaler’s revenue and a 22% free cash flow margin for the second quarter, alongside a 23% growth in Annual Recurring Revenue (ARR). The company aims to reach $3 billion in ARR by fiscal year 2025, highlighting strong demand for its services. UBS analyst Roger Boyd raised the price target for Zscaler shares to $260, citing a robust fourth-quarter billings performance and potential growth in the US Federal market.
Cantor Fitzgerald also increased its price target to $250, acknowledging Zscaler’s success with its Zscaler Internet Access and Private Access offerings. Stephens initiated coverage with an Overweight rating and a $255 price target, emphasizing Zscaler’s role in cloud-based network security and its potential for consistent top-line growth. Stifel maintained a Buy rating with a $235 target, pointing to Zscaler’s strong financial results and strategic market positioning.
Overall, these developments reflect confidence in Zscaler’s ability to capitalize on current cybersecurity trends and maintain its growth trajectory.
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