On Friday, TD Cowen maintained a Buy rating on Zscaler (NASDAQ:ZS) shares, with a steady price target of $270.00. The firm's analysis followed Zscaler's third-quarter fiscal year 2024 performance, which showcased a robust 32% revenue growth and a 29% increase in the calculated remaining performance obligations (cRPO) growth. The company also slightly raised its full-year 2024 guidance.
Zscaler's revenue upsurge was primarily attributed to the sustained demand for its Zero Trust Exchange platform. The firm anticipates that the demand for Zscaler's services will continue to be vigorous in the upcoming months. This outlook is based on the rising customer interest in Zscaler's nascent products and the ongoing success in the federal sector.
The analyst from TD Cowen highlighted the company's solid quarterly results, pointing out the significant revenue and cRPO growth. The slight uptick in the forecast for the full fiscal year 2024 was also noted as a positive indicator of the company's performance trajectory.
Zscaler's Zero Trust Exchange platform has been a key driver for the company's sales momentum. The platform's robust performance is expected to persist, bolstered by the growing interest in Zscaler's emerging products. Moreover, the company's continued penetration into federal markets is contributing to its strong sales dynamics.
In conclusion, TD Cowen's reiteration of the Buy rating and the $270 stock price target for Zscaler reflects the firm's confidence in the company's continued growth and market position, supported by solid quarterly results and favorable product demand trends.
InvestingPro Insights
Following TD Cowen's optimistic outlook on Zscaler, InvestingPro data and tips offer additional perspectives on the company's financial health and stock performance. Zscaler holds a substantial market capitalization of $26.85 billion, reflecting its significant presence in the cybersecurity space.
The company's impressive gross profit margin of 77.55% over the last twelve months as of Q2 2024 underscores its ability to maintain profitability in its operations, aligning with the robust revenue growth of 40.62% during the same period. Despite not being profitable over the last twelve months and trading at a high Price/Book multiple of 24.48, Zscaler's strong revenue growth indicates potential for future profitability.
Two InvestingPro Tips that stand out are the company's ability to hold more cash than debt on its balance sheet, which provides financial flexibility and stability, and the anticipation of sales growth in the current year, reinforcing the positive sentiment around the company's revenue prospects.
Furthermore, the company's stock has experienced a significant price drop over the last three months, which, according to the RSI, suggests the stock is in oversold territory, potentially presenting a buying opportunity for investors.
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