Zscaler Stock: Mixed Analyst Reactions Amid Growth Concerns and Strong Pipeline Outlook

TD Cowen holds Buy on Zscaler stock, optimistic on FY25 pipeline By Investing.com

On Wednesday, Zscaler (NASDAQ:ZS)'s stock retained its Buy rating and $270.00 price target from TD Cowen. The firm's analysis highlighted Zscaler's (NASDAQ:ZS) impressive fourth-quarter performance, which showcased a 30% year-over-year increase in revenue and a 27% growth in billings. The company achieved record bookings, surpassing $1 billion, as well as record profitability. TD Cowen focused on the company's strong financial outcomes, noting that Zscaler's fiscal year 2025 revenue guidance aligned with market consensus expectations. However, they pointed out that the stock was under pressure after hours due to a slowdown in the calculated remaining performance obligations (cRPO) growth, which was 23% versus the 30% that was estimated. Despite the cRPO deceleration, Zscaler's management remains optimistic about the fiscal year ahead. They have indicated that there is a strong pipeline for FY25, sales productivity is improving, and there is increasing momentum for the company's emerging solutions. These factors contribute to the firm's decision to reiterate their Buy rating and $270 price target for Zscaler's shares. The company's recent achievements are significant, as they represent a continuation of growth and profitability. Zscaler's ability to generate record bookings and maintain a trajectory of revenue expansion is a positive sign for investors and the firm alike. In summary, TD Cowen's reiteration of the Buy rating and price target for Zscaler is based on the company's solid fourth-quarter performance, despite some concerns over cRPO growth. The firm's outlook remains positive, supported by management's confidence in the company's pipeline and the potential of new solutions. In other recent news, Zscaler, a leading cybersecurity firm, has seen multiple adjustments to its stock price target following its fourth-quarter fiscal year 2024 results. BMO Capital Markets reduced its price target from $208 to $197, maintaining an Outperform rating, while Goldman Sachs (NYSE:GS) reaffirmed a Neutral rating with a steady price target of $177.00. Oppenheimer lowered its price target to $230, while Piper Sandler reduced its target to $215, both firms keeping their respective Outperform and Overweight ratings. Loop Capital also adjusted its target down to $165, upholding a Hold rating. Zscaler reported a 27% year-over-year increase in billings to $910.8 million, surpassing consensus estimates by $18 million or 2%. The company's revenue saw a 30% boost to $592.9 million, beating expectations by 4.5%. Despite these robust results, Zscaler's fiscal year 2025 billings guidance suggests a slower pace in the first half of the year, with expectations of a pickup in the second half. These recent developments reflect the transitional phase in Zscaler's sales leadership and the shift towards a more account-centric sales model. The company's collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies were also noted as significant. As Zscaler (NASDAQ:ZS) continues to demonstrate strong financial results, it's worth noting additional insights from InvestingPro that offer a deeper understanding of the company's current market standing. According to recent data, Zscaler's market capitalization stands at a robust $29.2 billion, and the company has been experiencing an impressive revenue growth of over 37% in the last twelve months as of Q3 2024. This aligns with the positive sentiment from TD Cowen regarding the company's revenue and billing growth. InvestingPro Tips highlight that analysts are expecting net income growth this year and are anticipating sales growth in the current year, which could signal further upside for the company. Moreover, Zscaler's gross profit margins remain strong at nearly 78%, showcasing the company's efficiency in maintaining profitability. While Zscaler is trading at high valuation multiples, such as a Price / Book multiple of 26.71, this may reflect the high growth expectations embedded in the stock. The company has also shown a strong return over the last month, with a price total return of 13.96%, which could be indicative of positive market sentiment. For investors seeking a more comprehensive analysis, InvestingPro offers additional tips, with a total of 13 tips available to explore at https://www.investing.com/pro/ZS. These insights, coupled with the company's strategic initiatives and market position, suggest that Zscaler is poised to continue its trajectory of growth, making it a company worth watching in the cybersecurity space.

Analyst keeps Neutral on Zscaler, lowers price target amid growth uncertainty By Investing.com

On Wednesday, Mizuho Securities adjusted its outlook on Zscaler Inc (NASDAQ:ZS), a company specializing in cloud-based information security, by reducing its price target to $195 from $210. The firm has decided to maintain a Neutral rating on the stock. This decision comes after Zscaler reported a total billings growth of 27%, surpassing the guidance of 24%. The company also highlighted a record level of new and upsell business activities and noted that its AI-analytics solutions added three percentage points to the growth figure. Despite the strong performance in billings growth, Mizuho expressed caution regarding Zscaler's forward-looking projections. The company's guidance for fiscal year 2025 billings was merely in line with expectations, and the revenue guidance was slightly below anticipations. Management is anticipating a weaker first half in billings than what analysts had projected. These projections have influenced Mizuho's stance on the stock. Mizuho's cautious outlook is further justified by the broader market context in which Zscaler operates. While acknowledging that Zscaler is well-positioned within the Secure Access Service Edge (SASE) market, the firm expressed concerns about the company's ability to consistently secure large, transformative deals. This skepticism is amplified by the current macroeconomic environment and a competitive market landscape for SASE offerings. Adding to the concerns, Mizuho noted the recent departure of Zscaler's Chief Operating Officer Dali Rajic, along with a number of sales personnel. This turnover is perceived as an increased risk to the company's near-term execution capabilities. The combination of these factors has led to a modest decrease in the price target set by Mizuho for Zscaler's shares. In other recent news, Zscaler, a leader in cloud security, reported a robust end to the fiscal year 2024 with a 27% increase in billings, surpassing expectations and achieving over $2.5 billion in Annual Recurring Revenue (ARR). However, the company's guidance for fiscal year 2025 billings indicates a 19% year-over-year growth at the midpoint, amounting to $3.123 billion, which aligns with the FactSet consensus estimate. This projection falls short of market expectations, typically expecting a higher margin of upside. Cantor Fitzgerald, UBS, and Wells Fargo (NYSE:WFC) have adjusted their price targets for Zscaler, while maintaining their respective ratings. Analysts from Jefferies and JPMorgan (NYSE:JPM) also revised their price targets for Zscaler, maintaining a positive outlook on the company's long-term market position and growth potential. Despite the projected slowdown in billings growth for the first half of FY2025, these analysts expressed confidence in Zscaler's ability to navigate the challenging macroeconomic environment. Zscaler's collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies were also noted. The company expects a rebound in billings growth in the second half of the fiscal year 2025, projecting a 23% year-over-year increase. As Zscaler Inc navigates a challenging economic environment, the latest data from InvestingPro provides a nuanced view of the company's financial health and market position. With a market capitalization of $29.2 billion, Zscaler is a significant player in the cloud-based information security space. Analysts are optimistic about the company's future, expecting net income growth and sales to rise in the current year, which aligns with the company's recent report of a billings growth surge. This anticipation is supported by Zscaler's impressive gross profit margin of 77.94% over the last twelve months as of Q3 2024, which underscores the company's strong pricing power and operational efficiency. Despite not being profitable over the last twelve months, Zscaler's liquid assets exceed its short-term obligations, suggesting a robust liquidity position that could weather potential market downturns. However, investors should note the company's high valuation multiples, with a Price / Book ratio of 26.71 as of Q3 2024, which may signal a premium price for the stock relative to its book value. Additionally, Zscaler does not pay a dividend, which may be a consideration for income-focused investors. For those interested in a deeper analysis, there are 13 additional InvestingPro Tips available, which provide further insights into Zscaler's performance and market outlook. Find these tips at: https://www.investing.com/pro/ZS

Zscaler shares get target cut but keep Strong Buy, Needham sees strong pipeline ahead By Investing.com

On Wednesday, Zscaler (NASDAQ:ZS), a leader in cloud security, received an updated price target from Needham, a notable investment firm. The new target is set at $235.00, decreased from the previous figure of $290.00. Despite this reduction, Needham has maintained a Strong Buy rating on the company's shares. Zscaler reported robust financial results for the fourth fiscal quarter, with billings growing by 27% year-over-year to $910.8 million, surpassing the consensus estimates by $18 million or 2%. Additionally, the company's revenue saw a 30% increase to $592.9 million, beating expectations by 4.5%. The company's initial fiscal year 2025 billings guidance was provided in line with expectations but indicated a heavier weighting towards the second half of the year. The guidance anticipates approximately 13% growth in billings for the first half, with an expected acceleration to low-20% growth in the second half. This projection is supported by a record pipeline and robust upsell and cross-sell activities, along with the benefit of pre-existing contracts contributing to billings. Zscaler's initial revenue growth forecast for fiscal year 2025 suggests an increase of 20%-21%, which is slightly below the consensus. However, the company experienced lower than expected attrition in the fourth quarter and has ramped up hiring in anticipation of improved productivity throughout the fiscal year, which is anticipated to support the acceleration in the second half. In summary, Needham's revised price target reflects a cautious yet optimistic outlook on Zscaler's future performance, considering the company's strong end to the fiscal year and expectations for continued growth and operational improvement in the coming year. In other recent news, Zscaler, the cloud security firm, reported strong fourth-quarter financial results, surpassing key metrics yet presenting an unexpected billing guidance for fiscal year 2025. The earnings report showed a 30% year-over-year revenue increase and a record free cash flow margin of 27%. However, the company's forecast for the first half of fiscal year 2025 indicates a projected slowdown in billings growth. This has prompted several analyst firms to adjust their price targets. Scotiabank, Baird, Rosenblatt, Mizuho Securities, and Cantor Fitzgerald have all maintained their ratings but lowered their price targets for Zscaler. Despite the cautious forecast, these firms expressed confidence in Zscaler's long-term market position and growth potential. Additionally, 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. As Zscaler (NASDAQ:ZS) navigates a landscape of growth and valuation adjustments, real-time data from InvestingPro provides a snapshot of the company's financial health and market performance. Analysts are optimistic about Zscaler's prospects, forecasting an uptick in net income and sales growth in the current year. This aligns with the company's robust financial results and the strong guidance provided for the upcoming fiscal periods. With a gross profit margin of approximately 77.94% in the last twelve months as of Q3 2024, Zscaler showcases its ability to maintain impressive profitability in its operations. InvestingPro Tips highlight that Zscaler's liquid assets exceed its short-term obligations, indicating a solid liquidity position. Moreover, the company operates with a moderate level of debt, which may provide flexibility for future investments and growth strategies. In terms of market performance, Zscaler has experienced a strong return over the last month, with a price total return of 13.96%, emphasizing the positive market sentiment towards the company. However, it's worth noting that Zscaler is trading at high valuation multiples, with a Price / Book multiple of 26.71 as of the last twelve months ending Q3 2024. This could suggest that the market has high expectations for the company's future growth. Investors interested in a deeper dive into Zscaler's performance can find additional InvestingPro Tips, with 11 more detailed insights available, highlighting various aspects of the company's financial and market behavior. For those considering an investment in Zscaler, the InvestingPro platform offers a comprehensive set of tools and analytics, including a fair value estimation of $191.63, which can help investors make informed decisions based on the latest data and expert analysis.

Zscaler stock outlook dims as Wells Fargo highlights billings growth challenges By Investing.com

On Wednesday, Wells Fargo (NYSE:WFC) adjusted its outlook on Zscaler (NASDAQ:ZS) stock, reducing the price target to $180 from $182 while maintaining an Equal Weight rating. The adjustment comes after Zscaler's stock experienced a 15% decline in after-market trading, despite reporting fourth-quarter results for fiscal year 2024 that surpassed expectations. The company's guidance for billings in fiscal year 2025, however, was slightly below analyst forecasts and displayed a heavy reliance on performance in the latter half of the year. Zscaler's fourth-quarter performance beat guidance across all metrics, but the growth in billings was less pronounced both sequentially and year-over-year. Management at Zscaler has indicated a considerable slowdown in billings growth for the first half of fiscal year 2025, projecting a year-over-year increase of just 13%. This slowdown is attributed to diminished growth from previously contracted billings and reduced productivity stemming from staff attrition and re-hiring efforts. Despite the anticipated deceleration in billings growth, Zscaler's management expects a rebound in the second half of the fiscal year, with billings growth projected to accelerate to 23%. This optimistic outlook is contingent upon an improvement in productivity, which the company acknowledges involves certain risks. The Wells Fargo analyst's commentary highlighted the significant deceleration in billings growth as a reason for maintaining the Equal Weight rating. With the revised price target of $180, the firm values Zscaler at 9.2 times its expected enterprise value to calendar year 2025 sales. This valuation reflects the cautious stance taken due to the potential challenges in achieving the forecasted ramp-up in productivity and subsequent billings growth. In other recent news, Zscaler has been at the center of several analysts' assessments following its fiscal fourth-quarter earnings report. The company outperformed expectations with a 27% year-over-year billings growth and surpassed a significant milestone by achieving over $2.5 billion in Annual Recurring Revenue (ARR). However, its first half fiscal year 2025 guidance, projecting a 13% growth, has raised concerns among investors. Analysts from multiple firms have adjusted their price targets for Zscaler. Jefferies reduced its target to $225, while maintaining a Buy rating, and JPMorgan (NYSE:JPM) cut its target to $220, yet maintained an Overweight rating. BTIG also reduced its target to $205 but kept a Buy rating on the stock. Guggenheim maintained a Neutral rating, expecting a revenue beat for the company's fourth quarter. Despite a projected slowdown in billings growth for the first half of FY2025, analysts from these firms expressed confidence in Zscaler's long-term market position and growth potential. They cited the company's history of conservative guidance and its tendency to outperform initial billings projections. The company's recent collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies were also noted. These are the recent developments in Zscaler's financial performance and market position. As Zscaler navigates through a period of deceleration in billings growth, the latest data from InvestingPro provides a broader perspective on the company's financial health and market performance. With a market capitalization of $29.2 billion, Zscaler is trading at a high Price / Book multiple of 26.71, which indicates a premium valuation compared to its book value. Despite not being profitable over the last twelve months, analysts expect a turnaround with net income predicted to grow this year. This aligns with the company's impressive gross profit margin of 77.94%, suggesting that Zscaler has a strong underlying business model with the potential to translate sales into profits more effectively in the near future. The company's revenue growth remains robust, with a 37.16% increase over the last twelve months as of Q3 2024, and analysts anticipate sales growth in the current year. This is a positive signal for investors looking for companies with strong top-line momentum. Moreover, Zscaler's liquid assets exceed short-term obligations, indicating a solid liquidity position to meet immediate financial responsibilities. For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, providing a comprehensive view of Zscaler's financial metrics and market performance. These tips can help investors make more informed decisions by considering factors such as the company's debt levels, valuation multiples, and profitability forecasts. For further insights and additional InvestingPro Tips on Zscaler, interested readers can visit https://www.investing.com/pro/ZS.

Is Zscaler stock at risk? UBS analyst highlights concerning billings trends By Investing.com

On Wednesday, UBS adjusted its outlook on Zscaler (NASDAQ:ZS) shares, reducing the price target to $250 from the previous $270, while sustaining a Buy rating on the stock. The firm's assessment followed Zscaler's fourth-quarter results, which showcased a 27% increase in billings and exceeded expectations in both operating margin (OpM) and free cash flow (FCF). Despite these robust outcomes, the perspective on the fiscal year 2025 (FY25) billings growth forecast -- projected at 19%-20% -- is perceived with a hint of caution by investors. This outlook represents a subtle downward adjustment from the prior quarter's guidance of approximately 20%, although the dollar amount remains unchanged. The analyst expressed confusion regarding the first-quarter billings guidance, which anticipates roughly 11% year-over-year growth, marking a significant 44% quarter-over-quarter decline -- the largest historical drop by 4 percentage points. Management attributes this forecast to the increasingly second-half weighted nature of the business, noting that bookings in the first half of both fiscal years 2023 and 2024 were weaker and are now contributing less to scheduled billings for FY25. This pattern is reportedly unchanged from 90 days ago, leading to speculation that management's expectations for first-half non-contracted billings -- including new business, upsells, and renewals -- may be growing more conservative. Despite these concerns, UBS remains positive about Zscaler's core business narrative. The firm believes that the guidance for FY25 billings, which aligns with the street consensus on a dollar basis, incorporates a significant degree of caution. Zscaler's performance and outlook continue to attract attention as the company navigates through its fiscal projections and market expectations. In other recent news, Zscaler has been in the spotlight following its fiscal fourth-quarter earnings report. The company exceeded expectations with a 27% year-over-year billings growth, surpassing a significant milestone by achieving over $2.5 billion in Annual Recurring Revenue (ARR). However, its guidance for the first half of fiscal year 2025, projecting a 13% growth, has sparked concerns among investors. Despite the projected slowdown in billings growth for the first half of FY2025, analysts from Wells Fargo (NYSE:WFC), Jefferies, JPMorgan (NYSE:JPM), and BTIG expressed confidence in Zscaler's long-term market position and growth potential. Wells Fargo reduced its price target for Zscaler to $180, maintaining an Equal Weight rating. Jefferies cut its target to $225, while maintaining a Buy rating. JPMorgan trimmed its target to $220, yet maintained an Overweight rating, and BTIG also lowered its target to $205 but kept a Buy rating on the stock. These recent developments in Zscaler's financial performance and market position have been highlighted by analysts' assessments. The company's collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA) to enhance security measures and integrate advanced AI technologies were also noted. These are the recent developments for Zscaler. Following UBS's recent price target adjustment for Zscaler, insights from InvestingPro provide a deeper understanding of the company's financial health and market performance. With an impressive gross profit margin of 77.94% over the last twelve months as of Q3 2024, Zscaler demonstrates its ability to maintain profitability in its operations. Additionally, the company has managed to keep a moderate level of debt, which is a positive sign for investors looking for stability. Analysts remain optimistic, as they predict sales growth in the current year and expect net income to grow. These projections are supported by a strong return over the last month of 13.96%, indicating positive short-term market sentiment. For those seeking a comprehensive analysis, InvestingPro offers additional tips, including insights on Zscaler's valuation multiples and profitability forecasts for the year. With the company not paying dividends, investors are likely to focus on these growth and profitability metrics when assessing Zscaler's potential. InvestingPro's data further reveals a market capitalization of $29.2 billion, emphasizing the scale of Zscaler's operations within its industry. While the company is trading at a high Price/Book multiple of 26.71, suggesting a premium valuation, the anticipated growth may justify this for growth-oriented investors. For a deeper dive into Zscaler's financials and to access more InvestingPro Tips, investors can refer to https://www.investing.com/pro/ZS, where additional insights are available to guide investment decisions.

Scotiabank cuts Zscaler stock target, maintains Sector Outperform rating By Investing.com

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.