Executive Departure Not A Worry At Zscaler As Products 'Sizzle,' Analyst Says With 'Strong Buy' Rating On The Stock

Needham analyst Alex Henderson reiterated a Strong Buy on Zscaler, Inc ZS with a $210 price target.
His pre-QP call with ZS offered an upbeat outlook. Despite macro conditions, ZS has not seen any erosion in its business.
However, it assumes a more constrained/possibly recessionary environment in its FY23 guide.
Many robust business drivers set Zscaler apart in these uncertain macro times.
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ZS is benefiting from the solid expansion of its new products, including ZDX, Cloud Workload, and Posture control.
S&M staffing was up 54% in FY22, suggesting a significant growth driver as additional capacity ramps.
ZS is also benefiting from a 5x increase in Sales through Cloud Marketplaces such as Amazon.com Inc AMZN AWS, and Microsoft Corp MSFT Azure.
Its VAR and SI channel are ramping sharply and poised to drive an accelerating contribution to growth.
ZS' Fed business is also seeing a sharp increase as FedRamp's High status drives rapid adoption and significant contract wins.
While a period of consolidation is possible, he thinks ZS is a unique investment vehicle with exceptional long-term value potential. Zscaler does security right.
He believes this will be a significant company and recommends investors buy these shares, establish a core position, and add on any weaknesses.
ZS' Fed business is also seeing a sharp increase as FedRamp's High status drives rapid adoption and significant contract wins.
Commenting on the departure of ZS' President Amit Sinha, the analyst notes Sinha will remain on the Board of Directors and that there is enough bench strength to manage the transition without impact to the business. The analyst specifies that the new products continue to sizzle.
Related: Why Zscaler Shares Are Sliding Today
Price Action: ZS shares traded lower by 5.34% at $148.78 on the last check Tuesday.

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