On Wednesday, Zscaler (NASDAQ:ZS)'s stock retained its Buy rating and $270.00 price target from TD Cowen. The firm's analysis highlighted Zscaler's (NASDAQ:ZS) impressive fourth-quarter performance, which showcased a 30% year-over-year increase in revenue and a 27% growth in billings. The company achieved record bookings, surpassing $1 billion, as well as record profitability.
TD Cowen focused on the company's strong financial outcomes, noting that Zscaler's fiscal year 2025 revenue guidance aligned with market consensus expectations. However, they pointed out that the stock was under pressure after hours due to a slowdown in the calculated remaining performance obligations (cRPO) growth, which was 23% versus the 30% that was estimated.
Despite the cRPO deceleration, Zscaler's management remains optimistic about the fiscal year ahead. They have indicated that there is a strong pipeline for FY25, sales productivity is improving, and there is increasing momentum for the company's emerging solutions. These factors contribute to the firm's decision to reiterate their Buy rating and $270 price target for Zscaler's shares.
The company's recent achievements are significant, as they represent a continuation of growth and profitability. Zscaler's ability to generate record bookings and maintain a trajectory of revenue expansion is a positive sign for investors and the firm alike.
In summary, TD Cowen's reiteration of the Buy rating and price target for Zscaler is based on the company's solid fourth-quarter performance, despite some concerns over cRPO growth. The firm's outlook remains positive, supported by management's confidence in the company's pipeline and the potential of new solutions.
In other recent news, Zscaler, a leading cybersecurity firm, has seen multiple adjustments to its stock price target following its fourth-quarter fiscal year 2024 results. BMO Capital Markets reduced its price target from $208 to $197, maintaining an Outperform rating, while Goldman Sachs (NYSE:GS) reaffirmed a Neutral rating with a steady price target of $177.00.
Oppenheimer lowered its price target to $230, while Piper Sandler reduced its target to $215, both firms keeping their respective Outperform and Overweight ratings. Loop Capital also adjusted its target down to $165, upholding a Hold rating.
Zscaler reported a 27% year-over-year increase in billings to $910.8 million, surpassing consensus estimates by $18 million or 2%. The company's revenue saw a 30% boost to $592.9 million, beating expectations by 4.5%. Despite these robust results, Zscaler's fiscal year 2025 billings guidance suggests a slower pace in the first half of the year, with expectations of a pickup in the second half.
These recent developments reflect the transitional phase in Zscaler's sales leadership and the shift towards a more account-centric sales model. The company's collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies were also noted as significant.
InvestingPro Insights
As Zscaler (NASDAQ:ZS) continues to demonstrate strong financial results, it's worth noting additional insights from InvestingPro that offer a deeper understanding of the company's current market standing. According to recent data, Zscaler's market capitalization stands at a robust $29.2 billion, and the company has been experiencing an impressive revenue growth of over 37% in the last twelve months as of Q3 2024. This aligns with the positive sentiment from TD Cowen regarding the company's revenue and billing growth.
InvestingPro Tips highlight that analysts are expecting net income growth this year and are anticipating sales growth in the current year, which could signal further upside for the company. Moreover, Zscaler's gross profit margins remain strong at nearly 78%, showcasing the company's efficiency in maintaining profitability.
While Zscaler is trading at high valuation multiples, such as a Price / Book multiple of 26.71, this may reflect the high growth expectations embedded in the stock. The company has also shown a strong return over the last month, with a price total return of 13.96%, which could be indicative of positive market sentiment. For investors seeking a more comprehensive analysis, InvestingPro offers additional tips, with a total of 13 tips available to explore at https://www.investing.com/pro/ZS.
These insights, coupled with the company's strategic initiatives and market position, suggest that Zscaler is poised to continue its trajectory of growth, making it a company worth watching in the cybersecurity space.
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