We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zscaler (ZS) Stock Reverses Course Upward: Time to Buy?
Read MoreHide Full Article
Zscaler, Inc. (ZS - Free Report) stock witnessed a remarkable run last year, with the share prices soaring 98% in 2023. Shares of this cybersecurity solution provider carried on the momentum in early 2024, with its share price reaching a 52-week high of $259.61 on Feb 9.
However, the stock pulled back since then and had been trading downward till May 30. But following the last excellent third-quarter fiscal 2024 earnings release on May 30, ZS stock has reversed its course and is on an upward trajectory.
Since May 30, 2024, shares of Zscaler have soared approximately 26%, significantly higher than the Zacks Internet – Services industry’s gain of 9.6%. Despite the upswing, ZS stock is still down approximately 10.9% for the year-to-date period.
Considering Zscaler’s recent performance, industry trends and future prospects, we believe that this dip presents a buying opportunity. Moreover, closing at $201.63 as of Jul 9, ZS stock still trades nearly 22% lower than its 52-week high, showing its potential for further upward movement.
Image Source: Zacks Investment Research
Let’s find out the factors that can help Zscaler carry its recent upward momentum further.
Trading Above 50-Day Moving Average
Technical indicators are supportive of Zscaler's strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Zscaler's financial health and prospects.
Image Source: Zacks Investment Research
Impressive Performance & Strong Prospects
Zscaler has demonstrated impressive financial performance in recent quarters as it is benefiting from the rising demand for security and networking products amid the growing hybrid working trend. Its non-GAAP earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.4%.
In the last reported results for the third quarter of fiscal 2024, its revenues and non-GAAP EPS surged 32% and 83%, respectively, on a year-over-year basis. The strong quarterly performance reflects the benefits of an expanding customer base and the increased adoption of its platform. Zscaler's billings, a key indicator of future revenues, also grew significantly, highlighting the company's strong market traction.
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $2.14 billion, which indicates year-over-year growth of approximately 32.4%. The consensus estimate for fiscal 2024 earnings is pegged at $2.99, which suggests a 67% increase from fiscal 2023.
Moreover, the long-term expected earnings growth rate currently stands at 26.5%, which is higher than the industry’s average growth of 23.7%. These estimates suggest continued confidence in Zscaler's ability to capture market share and expand its customer base.
Enhancing Platform Capabilities
Zscaler's commitment to innovation is a critical factor driving its success. The company continually enhances its platform with new features and capabilities to address emerging security challenges. Recent initiatives, such as the introduction of Zscaler Digital Experience (“ZDX”) and advancements in its Zero Trust Exchange platform, underscore its focus on innovation. These efforts are aimed at providing customers with advanced security solutions that ensure seamless and secure digital transformation.
Zscaler’s strategic acquisitions also play a vital role in strengthening its product portfolio and market position. Most recently, in March 2024, it acquired Avalor, which is expected to expand Zscaler's Zero Trust Exchange data, incorporating more than 150 pre-built integrations to empower customers in proactively identifying and predicting critical vulnerabilities while enhancing operational efficiencies.
Impressive Customer Growth
One of Zscaler’s significant strengths is its ability to attract and retain a diverse customer base. The company serves several industries, including finance, healthcare, manufacturing and government. Zscaler's customer-centric approach and ability to deliver tailored security solutions have resulted in high customer satisfaction and loyalty.
At the end of the third quarter of fiscal 2024, the company had 523 customers with $1 million or higher annualized recurring revenues (ARR). The company added 26 customers during the quarter with $1 million or more in ARR. Its customer count for ARR of more than $100,000 reached 2,922 at the end of the third quarter. As Zscaler continues to expand its customer base, it is well-positioned to achieve sustained revenue growth.
Strong Technology Partner Base
Zscaler’s strategic partnerships with major technology providers, including Microsoft (MSFT - Free Report) , Amazon’s (AMZN - Free Report) Amazon Web Services (“AWS”) and Alphabet’s (GOOGL - Free Report) Google Cloud, have further bolstered its market presence and enhanced cloud security offerings.
Zscaler’s collaboration with Microsoft involves integrating its Zero Trust Exchange platform with Microsoft Azure Active Directory. With Amazon’s AWS, ZS offers advanced security solutions tailored for AWS environments. Zscaler’s alliance with Alphabet’s Google Cloud integrates its security solutions with Google’s infrastructure, offering comprehensive protection for users.
These strategic alliances with Microsoft, Amazon and Alphabet enable Zscaler to provide state-of-the-art security solutions, ensuring secure digital transformation for enterprises. By leveraging these collaborations, Zscaler strengthens its market position and continues to innovate in the dynamic cybersecurity landscape.
Conclusion
For investors seeking exposure to the growing cybersecurity market, Zscaler currently offers a compelling case. The company’s robust financial performance, strong market position, and favorable industry trends bode well for future growth. Its innovative solutions, strategic partnerships, and solid financial health position it well for sustained growth.
Additionally, ZS sports a Zacks Rank #1 (Strong Buy) and a Growth Score of A at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today's Zacks #1 Rank stocks here.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Shutterstock
Zscaler (ZS) Stock Reverses Course Upward: Time to Buy?
Zscaler, Inc. (ZS - Free Report) stock witnessed a remarkable run last year, with the share prices soaring 98% in 2023. Shares of this cybersecurity solution provider carried on the momentum in early 2024, with its share price reaching a 52-week high of $259.61 on Feb 9.
However, the stock pulled back since then and had been trading downward till May 30. But following the last excellent third-quarter fiscal 2024 earnings release on May 30, ZS stock has reversed its course and is on an upward trajectory.
Since May 30, 2024, shares of Zscaler have soared approximately 26%, significantly higher than the Zacks Internet – Services industry’s gain of 9.6%. Despite the upswing, ZS stock is still down approximately 10.9% for the year-to-date period.
Considering Zscaler’s recent performance, industry trends and future prospects, we believe that this dip presents a buying opportunity. Moreover, closing at $201.63 as of Jul 9, ZS stock still trades nearly 22% lower than its 52-week high, showing its potential for further upward movement.
Image Source: Zacks Investment Research
Let’s find out the factors that can help Zscaler carry its recent upward momentum further.
Trading Above 50-Day Moving Average
Technical indicators are supportive of Zscaler's strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Zscaler's financial health and prospects.
Image Source: Zacks Investment Research
Impressive Performance & Strong Prospects
Zscaler has demonstrated impressive financial performance in recent quarters as it is benefiting from the rising demand for security and networking products amid the growing hybrid working trend. Its non-GAAP earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.4%.
Zscaler, Inc. Price, Consensus and EPS Surprise
Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote
In the last reported results for the third quarter of fiscal 2024, its revenues and non-GAAP EPS surged 32% and 83%, respectively, on a year-over-year basis. The strong quarterly performance reflects the benefits of an expanding customer base and the increased adoption of its platform. Zscaler's billings, a key indicator of future revenues, also grew significantly, highlighting the company's strong market traction.
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $2.14 billion, which indicates year-over-year growth of approximately 32.4%. The consensus estimate for fiscal 2024 earnings is pegged at $2.99, which suggests a 67% increase from fiscal 2023.
Moreover, the long-term expected earnings growth rate currently stands at 26.5%, which is higher than the industry’s average growth of 23.7%. These estimates suggest continued confidence in Zscaler's ability to capture market share and expand its customer base.
Enhancing Platform Capabilities
Zscaler's commitment to innovation is a critical factor driving its success. The company continually enhances its platform with new features and capabilities to address emerging security challenges. Recent initiatives, such as the introduction of Zscaler Digital Experience (“ZDX”) and advancements in its Zero Trust Exchange platform, underscore its focus on innovation. These efforts are aimed at providing customers with advanced security solutions that ensure seamless and secure digital transformation.
Zscaler’s strategic acquisitions also play a vital role in strengthening its product portfolio and market position. Most recently, in March 2024, it acquired Avalor, which is expected to expand Zscaler's Zero Trust Exchange data, incorporating more than 150 pre-built integrations to empower customers in proactively identifying and predicting critical vulnerabilities while enhancing operational efficiencies.
Impressive Customer Growth
One of Zscaler’s significant strengths is its ability to attract and retain a diverse customer base. The company serves several industries, including finance, healthcare, manufacturing and government. Zscaler's customer-centric approach and ability to deliver tailored security solutions have resulted in high customer satisfaction and loyalty.
At the end of the third quarter of fiscal 2024, the company had 523 customers with $1 million or higher annualized recurring revenues (ARR). The company added 26 customers during the quarter with $1 million or more in ARR. Its customer count for ARR of more than $100,000 reached 2,922 at the end of the third quarter. As Zscaler continues to expand its customer base, it is well-positioned to achieve sustained revenue growth.
Strong Technology Partner Base
Zscaler’s strategic partnerships with major technology providers, including Microsoft (MSFT - Free Report) , Amazon’s (AMZN - Free Report) Amazon Web Services (“AWS”) and Alphabet’s (GOOGL - Free Report) Google Cloud, have further bolstered its market presence and enhanced cloud security offerings.
Zscaler’s collaboration with Microsoft involves integrating its Zero Trust Exchange platform with Microsoft Azure Active Directory. With Amazon’s AWS, ZS offers advanced security solutions tailored for AWS environments. Zscaler’s alliance with Alphabet’s Google Cloud integrates its security solutions with Google’s infrastructure, offering comprehensive protection for users.
These strategic alliances with Microsoft, Amazon and Alphabet enable Zscaler to provide state-of-the-art security solutions, ensuring secure digital transformation for enterprises. By leveraging these collaborations, Zscaler strengthens its market position and continues to innovate in the dynamic cybersecurity landscape.
Conclusion
For investors seeking exposure to the growing cybersecurity market, Zscaler currently offers a compelling case. The company’s robust financial performance, strong market position, and favorable industry trends bode well for future growth. Its innovative solutions, strategic partnerships, and solid financial health position it well for sustained growth.
Additionally, ZS sports a Zacks Rank #1 (Strong Buy) and a Growth Score of A at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today's Zacks #1 Rank stocks here.