On Wednesday, TD Cowen maintained a positive outlook on Zscaler Inc . (NASDAQ:ZS), a leader in cloud security, reiterating a Buy rating and a $270.00 price target for the company's stock. The endorsement follows a recent meeting with Zscaler's VP of Investor Relations & Strategic Finance, Ashwin Kesireddy, on Tuesday.
The firm highlighted Zscaler's strategic growth through both organic development and acquisitions, which has effectively expanded its serviceable addressable market (SAM) to an estimated $100 billion, up from $72 billion in 2021.
The growth in SAM indicates Zscaler's successful expansion into complementary market adjacencies, enhancing its cybersecurity offerings. To support the delivery of its advanced solutions, Zscaler is in the process of overhauling its go-to-market strategy, aiming for more effective engagement with its potential customer base.
TD Cowen's reiterated price target of $270 is based on 15 times the firm's projected revenue for Zscaler in fiscal year 2025. This valuation reflects confidence in the company's future financial performance and its ability to capitalize on the growing need for cybersecurity solutions in an increasingly digital world.
Zscaler's strategic moves to widen its product portfolio and refine its market approach come as businesses globally are investing more in cybersecurity infrastructure to protect against evolving threats. The firm's sustained Buy rating and ambitious price target underscore a belief in Zscaler's potential for robust growth and market penetration in the coming years.
Investors and market watchers will likely continue to monitor Zscaler's progress as it implements its new go-to-market strategy and strives to meet the expectations reflected in TD Cowen's assessment. The company's efforts to innovate and adapt to the changing cybersecurity landscape will be critical in maintaining its competitive edge and achieving the anticipated revenue milestones.
In other recent news, Zscaler has been the focus of several analyst notes following its impressive Q3 results, which marked the company's first instance of GAAP profitability. The results showed a 30% year-over-year increase in billings and a record operating margin. Additionally, the company reported a robust Dollar-Based Net Retention rate and a 31% year-over-year growth in customers with an annual recurring revenue of over $1 million.
Zscaler also announced expanded collaborations with Google (NASDAQ:GOOGL) and NVIDIA (NASDAQ:NVDA). The partnership with Google aims to enhance Zero Trust security measures, providing improved threat and data protection for enterprise users. In conjunction with NVIDIA, Zscaler plans to integrate advanced AI technologies to bolster its cybersecurity services.
Analyst firms, including BofA Securities, Scotiabank, BMO Capital Markets, and Piper Sandler, have maintained positive outlooks on Zscaler. BofA Securities reiterated a Buy rating and a $265.00 price target, while Scotiabank maintained its positive stance with a price target of $210.00. BMO Capital Markets retained its Outperform rating with a steady price target of $208.00, and Piper Sandler confirmed its Overweight rating with a steady price target of $255.00.
These recent developments highlight Zscaler's strategic direction, robust financial performance, and promising partnerships in the cybersecurity space.
InvestingPro Insights
Enhancing the perspective on Zscaler Inc. (NASDAQ:ZS), current real-time data from InvestingPro offers additional context to the company's financial landscape. With a market capitalization of $27.08 billion, Zscaler's ambitious growth is reflected in its substantial revenue increase over the last twelve months as of Q3 2024, boasting a 37.16% growth rate. Despite a negative P/E ratio, which stands at -368.21, indicating the market's future earnings expectations, the company's gross profit margin impressively remains at 77.94%, showcasing its ability to maintain profitability in its core operations.
From the array of InvestingPro Tips, two particularly stand out in relevance to the article's discussion of Zscaler's potential. First, analysts have revised their earnings upwards for the upcoming period 34 times, signaling confidence in the company's financial trajectory. Furthermore, the company's gross profit margins are notably high, which aligns with the article's mention of Zscaler's strategic growth and advanced solutions delivery.
For readers looking to delve deeper into Zscaler's financial metrics and analyst forecasts, InvestingPro provides an extensive list of additional tips. There are 11 more tips available, which can be accessed through InvestingPro's platform. For those interested in a comprehensive analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, helping investors make more informed decisions.
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