Shares of cybersecurity firm Zscaler (ZS) tanked in after-hours trading after the company reported earnings for its fourth quarter of Fiscal Year 2024, which was followed by soft guidance. Earnings per share came in at $0.88, which beat analysts’ consensus estimate of $0.71 per share.
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Sales increased by 30.3% year-over-year, with revenue hitting $592.9 million. This beat analysts’ expectations by over $25 million. In addition, free cash flow increased to $136.3 million versus the $101.3 million seen in Q4 2023. The free cash flow margin also climbed from 22% to 23% during the same time period.
Looking forward, management now expects revenue and adjusted earnings per share for Q1 2025 to be in the ranges of $604 million to $606 million (consensus: $602.1 million) and $0.62 to $0.63 (consensus: $0.72), respectively. For FY 2025, these figures jump to a range of $2.6 billion to $2.62 billion (consensus: $2.623 billion) for revenue and $2.81 to $2.87 (consensus: $3.28) for EPS. This disappointing guidance is what led to the stock’s decline.
Bloggers Are Optimistic about ZS Stock
Using TipRanks’ Blogger Opinion tool, we can see that bloggers are optimistic about ZS stock. Indeed, of the 45 ZS writers tracked by TipRanks, 88% of them are bullish, which is higher than the sector average, as pictured below.
Is ZS Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ZS stock based on 25 Buys, six Holds, and zero Sells assigned in the past three months. After an 11% year-to-date decline, the average ZS price target of $232.04 per share implies 18% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
