6 Zscaler Analysts Give Their Takes On Upbeat Earnings, Guidance

Zinger Key Points
  • Zscaler reported solid results against an uncertain macro backdrop, with a "myriad of robust business drivers," one analyst says.
  • The company is likely to meet or exceed the October quarter guide, another analyst states.
6 Zscaler Analysts Give Their Takes On Upbeat Earnings, Guidance

Shares of Zscaler Inc ZS spiked close to 11% in Thursday’s after-hours session, after the company reported upbeat quarterly results, with earnings and revenue beating Street expectations.

BMO Capital Markets On Zscaler

Analyst Keith Bachman maintained an Outperform rating, while raising the price target from $172 to $200.

“ZS generated ~11% of billings upside to our/consensus, and total billings growth accelerated to 56.6% y/y from 53.6% y/y last quarter, and against a challenging ~70% y/y compare,” Bachman said in a note.

Despite headwinds, management’s fiscal 2023 guidance “exceeded consensus estimates across the board whereas much of our coverage universe has lowered expectations,” he added. The analyst further stated the guidance for the October quarter does not appear to be “challenging to reach or exceed.”

RBC Capital Markets On Zscaler

Analyst Matthew Hedberg reiterated an Outperform rating while raising the price target from $200 to $210.

“At significant scale and despite an uncertain macro environment, Zscaler delivered a very strong quarter, topping expectations across the board,” Hedberg wrote in a note. “We remain impressed with strong growth and profitability, with FY/23 guidance implying ~150 bps margin improvement vs. FY/22,” he added.

JMP Capital Markets On Zscaler

Analyst Trevor Walsh reaffirmed a Market Outperform rating and a price target of $280.

Zscaler delivered a solid outperformance “across all guided metrics relative to consensus, and a notable issuing of billings, revenue, and EPS guidance for FY23 above expectations” despite limited visibility into the back half of the year, Walsh said.

The stock trades at a premium to peers, which is “warranted,” given “the company’s sustained high revenue growth, leadership position and brand recognition in Zero Trust solutions, and sizable addressable market to penetrate further within the install base as well as greenfield opportunity,” he further mentioned.

Check out other analyst stock ratings.

Mizuho Securities On Zscaler

Analyst Gregg Moskowitz maintained a Buy rating while raising the price target from $200 to $205.

“ZS successfully navigated a difficult environment by reporting a strong F4Q,” Moskowitz wrote.

“Looking forward, we believe that ZS remains very well-positioned for growth, and that its unique cloud proxy security architecture should enable it to thrive in an increasingly digital-enabled world,” the analyst said. “We also continue to expect significant improvements in monetization, particularly as ZDX and Zscaler for Workloads gain further traction,” he added.

Needham On Zscaler

Analyst Alex Henderson reiterated a Strong Buy rating while raising the price target from $185 to $210.

“A myriad of robust business drivers set Zscaler apart in these uncertain macro times,” Henderson wrote in a note. “Zscaler is benefiting from a robust expansion of its new Products including ZDX, Cloud Workload and Posture products,” he added.

BofA Securities On Zscaler

Analyst Tal Liani reaffirmed a Buy rating and a price target of $195.

While delivering solid results and an upbeat forecast, Zscaler’s management “flagging conservatism in the guide due to deteriorating macro conditions,” Liani said in a note. “However, the company remains committed to balancing growth and profitability, and guided to operating margin expansion of 150bps while continuing to invest across S&M and R&D,” he further wrote.

ZS Price Action: Shares of Zscaler had risen by 19.22% to $183.90 Friday at publication.

Posted In: Alex HendersonBMO Capital MarketsBofA SecuritiesCybersecurityGregg MoskowitzJMP Capital MarketsKeith BachmanMatthew HedbergMizuho SecuritiesNeedhamRBC Capital MarketsTal LianiTrevor WalshAnalyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTechTrading Ideas