Why Analysts See Up To 25% Upside In This Security-As-A-Service Firm?

Analysts mainly lauded Zscaler Inc's ZS 70% year-on-year billings growth above consensus in Q4, network and raised their price targets betting on network transformation, strong security backdrop.
Piper Sandler analyst Rob Owens raised the PT to $285 from $235, indicating a 3.7% upside, and reiterated a Neutral.
Owens noted that the tailwinds from the ongoing network transformation and favorable security backdrop contribute to a robust demand environment.
Canaccord analyst T. Michael Walkley raised the PT to $340 from $300, implying a 23.7% upside, and maintained a Buy.
Walkley believed Zscaler is increasingly well-positioned for accelerating growth trends given its strong technology moat and accelerating platform uptake.
Zscaler benefitted from cloud migration, the adoption of Zero Trust principles, and the rapid growth in targeted breaches and ransomware attacks.
Morgan Stanley analyst Keith Weiss raised the PT to $275 from $215, implying fully priced at the current level.
While Zscaler's technology positioning and ability to execute to a substantial market opportunity "appears undeniable," Weiss maintained an Equal Weight over the sustainability of the valuation and "remarkable growth."
JMP Securities analyst Erik Suppiger raised the PT to $330 from $270, signifying a 20% upside, and affirmed an Outperform.
Mizuho analyst Gregg Moskowitz raised the PT to $320 from $280, indicating a 16.4% upside, and reiterated a Buy.
The analyst says Zscaler's significant customer momentum is "clearly building."
Needham analyst Alex Henderson raised the PT to $345 from $280, implying a 25.5% upside, and maintained a Strong Buy.
BTIG analyst Gray Powell raised the PT to $324 from $279, signifying a 17.8% upside, and affirmed a Buy.
Barclays analyst Saket Kalia raised the PT to $318 from $289, indicating a 15% upside, and reiterated an Equal Weight.
The analyst took his margin estimates down despite the revenue upside, saying the company is investing for continued growth.
Price Action: ZS shares traded lower by 1.51% at $276 on the last check Friday.

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