Barclays (LON:BARC) has updated its outlook on Zscaler Inc (NASDAQ: NASDAQ:ZS), a leading company in cloud-based information security, by increasing its price target to $230 from the previous $210.
The firm continues to recommend an Overweight stance on the stock. This adjustment comes ahead of Zscaler's anticipated earnings report scheduled for the afternoon of Tuesday, September 3, 2024.
The analyst at Barclays noted that there is potential for Zscaler to exceed fourth-quarter billing expectations due to positive industry checks and typical seasonal strength. Additionally, they believe that the forecast for fiscal year 2025 billings growth, estimated at 20% year-over-year from a higher starting point, is well-calibrated.
In other recent news, Zscaler has been the subject of several analyst notes following its strong fiscal performance. The company reported its first instance of GAAP profitability, with a 30% year-over-year increase in billings and a record operating margin. It also saw a 31% year-over-year growth in customers with an annual recurring revenue of over $1 million.
Despite these positive developments, Mizuho Securities downgraded Zscaler's stock from Outperform to Neutral, citing concerns over potential shifts in the market that could impact Zscaler's performance.
However, Piper Sandler maintained its Overweight rating on Zscaler, expressing confidence in the company's market positioning and strategic initiatives. TD Cowen also maintained a Buy rating, highlighting the company's strategic growth through organic development and acquisitions. BofA Securities reiterated a Buy rating, affirming its confidence in Zscaler's strategy and innovation pipeline.
In addition to these analyst notes, Zscaler announced expanded collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA). These partnerships aim to enhance Zero Trust security measures and integrate advanced AI technologies, respectively.
InvestingPro Insights
As Zscaler Inc (NASDAQ:ZS) approaches its earnings report, the company's financial health and growth prospects are of considerable interest to investors. According to InvestingPro data, Zscaler's market capitalization stands at a robust $30.14 billion, and the company has demonstrated a significant revenue growth of 37.16% over the last twelve months as of Q3 2024. This upward trend is further supported by an impressive gross profit margin of nearly 78%, highlighting the company's ability to efficiently manage its cost of sales.
InvestingPro Tips suggest that Zscaler is expected to see net income growth this year, with analysts anticipating a rise in sales. These forecasts align with the strategic changes in the company's go-to-market approach mentioned by the Barclays analyst. Furthermore, Zscaler's liquid assets surpassing short-term obligations indicate a solid liquidity position, which is crucial for sustaining operations and investing in growth opportunities. It's also worth noting that Zscaler is trading at a high Price / Book multiple of 27.58, which may reflect the market's optimism about the company's future performance.
Investors can find additional insights and tips on Zscaler, with 12 more InvestingPro Tips available, providing a more in-depth analysis of the company's financials and market valuation. For those interested in a deeper dive into Zscaler's investment potential, these tips can be accessed at https://www.investing.com/pro/ZS.
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