On Tuesday, Piper Sandler, a financial services firm, raised its price target on shares of Zscaler (NASDAQ:ZS) to $235 from $215, while maintaining an Overweight rating on the stock. Currently trading at $208.51 with a market capitalization of $32 billion, Zscaler's stock revision followed fiscal first-quarter results that exceeded market expectations. The company's forward guidance also reflected the positive performance. According to InvestingPro data, analyst price targets for Zscaler range from $177 to $270.
The analyst from Piper Sandler expressed continued confidence in Zscaler, citing several factors that reinforce a positive outlook. The company maintains impressive gross profit margins of 78% and achieved robust revenue growth of 34% in the last twelve months. An acceleration in bookings growth and advancements in the go-to-market (GTM) transformation were highlighted as key drivers of optimism for the company's performance in the second half of the fiscal year. The analyst anticipates that Zscaler's momentum will lead to further beats and raises in its financial reports.
The robust fiscal first-quarter results were deemed a solid indication of Zscaler's potential, prompting the analyst to recommend buying the stock on any post-earnings weakness. The company's bookings growth, which increased by more than 30% year-over-year, and its ongoing leverage improvements were emphasized as signs of Zscaler's strong position in the security sector.
Furthermore, the analyst pointed out that the 20%+ growth in unscheduled billings during the fiscal first quarter suggests that only a minimal increase in growth is required to meet the full-year guidance.
This aspect, along with the expected billings acceleration in the second half of the year, supports the firm's decision to remain Overweight on Zscaler's stock and to raise the price target to $235. InvestingPro analysis indicates the stock is slightly overvalued at current levels, with additional insights available in the comprehensive Pro Research Report, including 10+ exclusive ProTips and detailed financial health metrics.
In other recent news, Zscaler, a leader in cloud-based security, has seen a series of recent developments. The company reported a growth of over 20% in first-quarter billings and a revenue growth of 34.07%, surpassing its own guidance. However, Loop Capital adjusted its price target for Zscaler from $200 to $195, citing risks associated with the company's high billing growth expectations and the announced retirement of the Chief Financial Officer.
Several other analyst firms have also shared their insights on Zscaler. Citi raised its price target for Zscaler to $235, maintaining a Buy rating, following the company's strong first-quarter performance. Similarly, Scotiabank (TSX:BNS) reiterated an outperform rating, raising the target to $205, while Canaccord Genuity kept a buy rating, increasing the price target to $230. Despite the CFO's retirement, these firms maintain a positive outlook for Zscaler's future growth and profitability.
These are recent developments, providing investors with a snapshot of Zscaler's current position. The company has demonstrated a robust financial performance and has received positive ratings from multiple analysts. 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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