🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

Scotiabank cuts Zscaler stock target, maintains Sector Outperform rating

EditorTanya Mishra
Published 04-09-2024, 05:22 pm
ZS
-

Scotiabank has made an adjustment to the price target of Zscaler shares (NASDAQ: NASDAQ:ZS), bringing it down to $195.00 from the previous target of $210.00.

The firm has kept its Sector Outperform rating for the cloud security company. This change follows Zscaler's fourth-quarter financial results, which surpassed key metrics but presented an unexpected billing guidance for fiscal year 2025 that puzzled investors.

The company's management has forecasted a billing performance heavily weighted towards the third and fourth quarters, which introduces additional risk into the Zscaler investment narrative.

Despite this, Scotiabank reaffirmed its positive stance on Zscaler, citing the company's enduring market leadership in cloud security.

The analyst pointed to Microsoft (NASDAQ:MSFT)'s new Secure Access Service Edge (SASE) offering, noting its high price point and predicting minimal impact on Zscaler's enterprise win rates and sales cycles.

The SASE market is seen as far from being fully tapped, and Scotiabank anticipates that its growth will continue to exceed expectations in the coming year.

Zscaler's profitability in relation to its growth in the fourth quarter was highlighted as one of the best in the software sector. The analyst appreciates the aspect of Zscaler's performance, emphasizing the company's efficiency.

In other recent news, Zscaler reported earnings that exceeded expectations, with a 30% year-over-year revenue increase and a record free cash flow margin of 27%. However, the company's guidance for the first half of fiscal year 2025 indicates a projected slowdown in billings growth, prompting Baird to lower its price target for Zscaler to $225, while maintaining an Outperform rating.

Rosenblatt and Cantor Fitzgerald also retained their Neutral ratings, adjusting their price targets to $190 and $170 respectively.

In addition, Mizuho Securities reduced its price target to $195, citing concerns about Zscaler's forward-looking projections and recent personnel changes. UBS, despite reducing its price target to $250, maintains a Buy rating on the stock, expressing positivity about Zscaler's core business.

Zscaler's collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies have been noted as significant.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.