Analysts See Zscaler Benefiting From Economic Slowdown, Cloud Transition Post Q3 Beat

Analysts expressed the reasons behind their optimism on Zscaler, Inc ZS post Q3 beat.
Needham analyst Alex Henderson maintained a Strong Buy rating on Zscaler and set a price target of $185.
Zscaler delivered a strong Q3, easily beating street estimates, and guided well ahead of Street forecasts for the July quarter.
RPO growth of 83%, Revenue growth of 63%, and Free Cash Flow equal to 15% of Revenues showed the overall strength of the operations.
Zscaler believes it's seeing an acceleration in its pipeline and is benefiting from slower economic conditions and customer cost pressures.
Zscaler helps companies lower complexity, streamline Security, consolidate vendors, accelerate transitions to the cloud, and improve cloud security while improving user experiences.
As a result, customers see Zscaler as an answer to the question: "How can I improve my Security while continuing to move to the Cloud to improve my agility even as my budget tightens?"
Credit Suisse analyst maintained Zscaler with an Outperform and lowered the price target from $410 to $310.
Quarterly results reinforce that Zscaler, as the flagbearer of cloud security with a differentiated architecture, is uniquely positioned to help drive transformational change toward Zero Trust security architectures.
Despite concerns of a COVID-driven pull-forward, the analyst believes 2022 will be defined by businesses moving forward on multi-year, "strategic" cloud-first transformation roadmaps.
As organizations increasingly focus on these large-scale architectural shifts, the analyst believes a meaningful runway exists for Zscaler.
Price Action: ZS shares traded higher by 11.88% at $159.00 on the last check Friday.

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