Analyst Gabriela Borges from Goldman Sachs maintained a Hold rating on Zscaler and increased the price target to $283.00 from $271.00.
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Gabriela Borges’s rating is based on a combination of factors that reflect both positive developments and ongoing challenges for Zscaler. The company’s recent quarterly results showed a modest increase in billings and revenue, slightly surpassing market expectations. Additionally, Zscaler’s guidance for the upcoming fiscal year indicates continued revenue growth, although the EBIT margin is expected to be slightly below market estimates.
Despite these positive indicators, Borges maintains a Hold rating due to the competitive landscape in the security industry, particularly in the SASE market. While Zscaler is making strategic progress with initiatives like Data Security and Zero Trust Everywhere, the heightened competition in the lower and mid-market segments presents challenges. Furthermore, the durability of new initiatives such as AI Operations and the potential for Zscaler to replace SD WAN appliances with its hardware remain areas to watch. These factors contribute to a balanced outlook, justifying the Hold rating.
In another report released yesterday, B.Riley Financial also maintained a Hold rating on the stock with a $275.00 price target.
Based on the recent corporate insider activity of 51 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ZS in relation to earlier this year.