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On Wednesday, Susquehanna analysts reiterated a Positive rating on Zscaler (NASDAQ:ZS) stock, maintaining a price target of $320.00. The stock, currently trading at $295.03 with a market cap of $45.93 billion, has shown impressive momentum with a 74% return over the past year. The decision follows insights shared by Zscaler regarding its platform expansion opportunities, particularly through agentic operations.
Zscaler management highlighted the potential for platform growth amid architectural shifts from on-premise to cloud environments. With robust revenue growth of 25.46% and industry-leading gross margins of 77.46%, the company continues to demonstrate strong execution. The company noted the increasing role of AI in detection processes due to these changes. A key point of discussion was the challenge posed by the rising number of IoT and OT devices, which now exceed the number of traditional endpoints.
The company emphasized its ability to synthesize first-party and third-party data, facilitated by its data fabric acquired from Avalor. This synthesis is crucial for Zscaler to enhance its security operations capabilities.
Additionally, Zscaler’s acquisition of Red Canary’s agentic AI technology enables the company to automate threat and exposure management. This automation is achieved through specialized task agents focused on data collection, investigation, policy, and reporting.
In other recent news, Zscaler reported strong third-quarter performance, with billings increasing by 25% year-over-year, surpassing the company’s guidance of 21%. The company also saw free cash flow exceed expectations by 14% and an improvement in operating margin by 44 basis points. UBS analysts responded by raising the price target for Zscaler stock to $315 from $260, maintaining a Buy rating. Zscaler’s acquisition of Red Canary is anticipated to enhance its security operations capabilities, particularly in AI-driven threat detection.
Needham analysts also raised their price target for Zscaler to $350 from $310, citing advancements in AI and the company’s Zero Trust Everywhere initiative. Similarly, Wedbush increased their target to $330 from $300, noting strong demand and positive feedback from Zscaler’s user conference. BTIG analysts raised their target to $329 from $298, highlighting increased interest in Zscaler’s Zero Trust Branch offering and improvements in go-to-market initiatives. Meanwhile, Mizuho (NYSE:MFG) analysts raised their target to $290 from $275, maintaining a Neutral rating due to macroeconomic challenges and a competitive market.
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