Market Overview

Why Zscaler Is Best Positioned To Benefit From Secular Trend Toward Cloud-Based Security Platform

Share:

Sell-side has touted Zscaler Inc (NASDAQ: ZS) as one of the software companies that could weather the spending headwinds arising out of the COVID-19 pandemic. This thought was echoed by an analyst at Rosenblatt Securities.

The Zscaler Analyst

Yun Kim upgraded Zscaler from Hold to Buy and increased the price target from $58 to $75.

The Zscaler Thesis

The current secular trend toward cloud-based security platform will likely accelerate due to the current work-from-home trend and increasing adoption of virtual work environment going forward, Kim said, and Zscaler is the best-positioned security software to benefit from the trend.

With workloads increasingly migrating to cloud and more users accessing cloud applications and deployments outside of the corporate network, the market is looking for a "new security paradigm based on a multi-tenant cloud platform" that displaces the traditional approach, the analyst said.

"In our view, ZS is the single best pure-play vendor to play this secular trend that represents the highest priority for most organizations," Kim wrote in the note.

The company's VPN solution - Zscaler Private Access – is seeing accelerating adoption. However, the analyst expects the core Zscaler Internet Access business to see a slowdown in the near term, primarily due to the strategic nature of the ZIA sales process and somewhat lengthy sales and deployment cycle.

With preliminary industry checks indicating the sales momentum at ZPA business more than offsetting the slower ZIA business momentum, Rosenblatt said it's comfortable with its current April-ending estimate.

ZS Price Action

Zscaler shares traded around $62.22 at time of publication.

Latest Ratings for ZS

DateFirmActionFromTo
Jul 2020RBC CapitalInitiates Coverage OnOutperform
Jun 2020NeedhamMaintainsStrong Buy
Jun 2020Morgan StanleyUpgradesUnderweightEqual-Weight

View More Analyst Ratings for ZS
View the Latest Analyst Ratings

 

Related Articles (ZS)

View Comments and Join the Discussion!

Posted-In: Rosenblatt Securities Yun KimAnalyst Color Upgrades Price Target Analyst Ratings Tech

Latest Ratings

StockFirmActionPT
TYGB of A SecuritiesUpgrades
ZIONB of A SecuritiesMaintains39.0
RFB of A SecuritiesMaintains13.0
PNCB of A SecuritiesMaintains123.0
HBANB of A SecuritiesMaintains11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com