On Tuesday, Mizuho (NYSE:MFG) maintained its Neutral stance on Zscaler (NASDAQ:ZS), a $32 billion cloud-based information security company, with a price target of $210. According to InvestingPro data, the stock currently trades at $208.51, with analyst targets ranging from $177 to $270. The firm's analysis followed Zscaler's report of a solid overall first quarter, where total billings growth of 13% year-over-year slightly surpassed both the firm's and Wall Street's expectations of 11% growth.
The revenue for the quarter also exceeded consensus estimates. InvestingPro data shows impressive revenue growth of 34.07% and an industry-leading gross profit margin of 78.08%.
Zscaler's growth in the first quarter was considered moderate by investors, who had higher expectations. The company's guidance for second-quarter revenue and earnings per share was aligned with or slightly below expectations, with the first-quarter revenue outperformance factored into the full-year projections. Notably, Zscaler's Chief Financial Officer, Remo Canessa, announced his retirement, an event the firm noted would be felt by the company.
Mizuho's report acknowledged Zscaler's strong positioning within the Secure Access Service Edge (SASE) market. Despite this, the firm expressed concerns about Zscaler's ability to consistently secure large, transformative deals, especially considering the current challenging macroeconomic environment and heightened competition in the SASE sector. These factors, along with the high sales turnover experienced earlier in the calendar year 2024, contributed to Mizuho's cautious outlook on the company's stock.
In summary, while recognizing Zscaler's solid first-quarter performance and its established role in the SASE landscape, Mizuho reiterated its Neutral rating and $210 price target, signaling a conservative stance on the stock's near-term prospects.
InvestingPro analysis indicates the company maintains a GOOD financial health score, with 8 additional exclusive ProTips available to subscribers, including detailed insights on profitability trends and valuation metrics.
In other recent news, Zscaler, a cybersecurity company, has been the subject of several analysts' reports. Scotiabank (TSX:BNS) has maintained an outperform rating and raised the company's target to $205, citing comprehensive checks with resellers and significant customers.
Similarly, Canaccord Genuity has kept a buy rating on Zscaler, increasing the price target to $230 from $220 based on the company's raised guidance for fiscal year 2025. Truist Securities has reiterated a buy rating and a price target of $260, while Evercore ISI has maintained an outperform rating with a $245.00 price target. Bernstein has also maintained an outperform stock rating alongside a steady price target of $238.00.
Zscaler's revenue has grown by 34% over the last twelve months, demonstrating strong operational execution. The company's CFO, Remo Canessa, announced his retirement, adding a layer of uncertainty. Despite this, Zscaler has maintained robust revenue growth. Furthermore, the company has raised its full-year revenue growth forecast from 20.5% to 21.5% and billing growth by 0.5% to 19.5%.
These are recent developments and provide investors with a snapshot of Zscaler's current position according to several analyst firms. The company has demonstrated a robust financial performance and has received positive ratings from multiple analysts, indicating confidence in its future growth and profitability. Despite the retirement of the CFO, analysts believe that Zscaler will continue to perform well and maintain its strong position in the cybersecurity market.
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