Zscaler’s Stock is Setting Up to Go Bonkers

Zscaler shares were up on Tuesday, just one day after the security software company hosted an seemingly well-received virtual meeting with analysts.

The company didn’t divulge its financial outlook at the rendezvous, but it did give investors reason to feel optimistic about the stock. At least four analysts upped their target prices for Zscaler shares [$ZS] following the meeting. Hackers Breach U.S. Government Networks

Credit Suisse analyst Brad Zelnick reiterated his Outperform rating, increasing his price target to $215 from $175. Zelnick noted that the meeting gave him “even more conviction around both the size of the company’s opportunity and ability to execute against it.” He added the company is well positioned in an area called “zero trust” security architectures, an approach that requires all users—even those inside the network—to be authenticated and authorized. Zelnick also said the Sunburst attack on SolarWinds “has proven to be a stark reminder of the benefits of zero trust.”

Baird analyst Jonathan Ruykhaver also doubled down on his Outperform rating and upped his target to $220 from $180. “Management commentary at Zscaler’s analyst day was very positive around the long-term opportunity for the company,” he wrote. “The company sees significant potential to expand both within the existing customer base as well as acquire new customers.”

Needham analyst Alex Henderson reiterated his Strong Buy rating with a new target of $240, up from $215.

“As their traffic doubles every 20 months, it’s creating a network effect, building Zscaler’s competitive edge,” Henderson wrote. “We foresee upside to numbers and a longer term sustainable high levels of growth with nicely expanding margins. This gives us the confidence to increase our price target again, especially as we believe it’s still early days in Zscaler’s growth.”

Truist analyst Joel Fishbein confined his Hold rating, did decide to lift his target to $175 from $130. “Zscaler is revolutionizing the security marketplace with its cloud-native security platform,” he wrote. “The company’s unique and innovative approach to security targets a well-defined $72 billion total addressable market not including potential adjacent market expansion opportunities. We believe the shares are priced for near perfect execution in the current, uncertain market environment and remain on the sidelines … as we look for a more attractive entry point.”


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