Peter Weed, an analyst from Bernstein, maintained the Buy rating on Zscaler (ZS – Research Report). The associated price target was raised to $244.00.
Peter Weed’s rating is based on Zscaler’s improved sales execution and strategic investments that are beginning to yield positive results. The company has shown a notable increase in revenue and billings, surpassing consensus estimates, which indicates effective sales strategy changes and enhanced productivity. Additionally, Zscaler’s platform product traction is expanding beyond its core offerings, contributing to its growth.
Furthermore, the company has demonstrated strong customer retention, with net revenue retention increasing and churn rates decreasing. This improvement is supported by a rise in gross-dollar retention, signaling a robust sales and product platform. Zscaler’s ability to upsell existing customers and record a significant increase in high-value customers further underscores its growth potential. Despite concerns about exposure to the US Federal sector, Zscaler’s limited exposure and ongoing discussions with the government to enhance cost savings and productivity highlight its strategic positioning. Consequently, Peter Weed has raised the price target to $244, maintaining an Outperform rating.
In another report released today, JMP Securities also maintained a Buy rating on the stock with a $240.00 price target.
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