Zscaler (ZS) Maintains Buy Rating Amidst Competitive Resilience and Market Dominance – TipRanks Financial Blog


Robert W. Baird analyst Shrenik Kothari has maintained their bullish stance on ZS stock, giving a Buy rating yesterday.

Shrenik Kothari has given his Buy rating due to a combination of factors including the company’s resilience in a challenging market environment and its competitive positioning. Despite Palo Alto Networks (PANW) facing unforeseen hurdles with federal program delays, Zscaler (ZS) is seen in a favorable light, with potential benefits from strong federal cybersecurity budgets focused on Zero Trust architecture. Kothari believes that ZS’s platform remains sticky and superior, even as PANW’s shift towards platform pricing puts pressure on the sector. Furthermore, Zscaler is entering its second quarter with achievable billings and revenue projections, with historical performance indicating a consistent trend of surpassing top-line estimates.

The positive sentiment is reinforced by various checks and surveys conducted, which point to robust performance and a tendency towards single-vendor adoption—a trend that Zscaler is well-positioned to capitalize on. The success of Zscaler’s premium bundles and new product introductions, like the Branch Connector, underlines its strong market presence. Although competitive pressures are present, Zscaler maintains impressive win and close rates. The departure of Zscaler’s COO, Dali Rajic, initially raised concerns, but the transition is expected to be smooth with strategic hires already in place. Finally, PANW’s aggressive strategy in the endpoint/XDR market is not seen as impacting Zscaler’s SASE market dominance, further justifying the Buy rating.

Kothari covers the Technology sector, focusing on stocks such as Zscaler, Fortinet, and CyberArk Software. According to TipRanks, Kothari has an average return of 38.7% and an 87.04% success rate on recommended stocks.

In another report released yesterday, Stifel Nicolaus also maintained a Buy rating on the stock with a $270.00 price target.

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Zscaler (ZS) Company Description:

Zscaler, Inc., formerly known as SafeChannel Inc., is a cloud-based security solutions provider. The company offers a full range of enterprise network security solutions including internet security, web security, vulnerability management, firewalls, antivirus, and control over user activity in mobile, cloud computing, and Internet of Things environments.

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