Reuters Zscaler Stock: Great long-term game with cyber security
In the last 12 months 96%, and about 40% year-to-date, has the ship sailed with Zscaler (NASDAQ 🙂 stock? Not necessarily.
Yes, after their incredible race, shares in Cloud Security Play will, perhaps, see more modest gains in the short term. This does not mean that it is going to be a growth story as soon as the post-Kovid recovery is revealed.
The lockdown environment in the United States and other major economies could be over. Yet, the extended expansion of remote work is not going anywhere.
As a hybrid office environment becomes more common, providers of these secure web gateways will continue to benefit from the growing demand. Not only that, new opportunities are opening up, which will help expand its growth runway.
That said, growth is not the only thing that is running high. The evaluation is the same. I bullish on the stock. (See ZS stock chart at TipRanks)
ZS stock: continues to rise even after reopening
As its recent quarterly results show, Zscaler’s growth has not slowed down much since last year’s “return to normal” after the epidemic lockdown.
Quarterly earnings for the year ended July 1, 2021 increased by 57% year on year. Billing increased 70% over the previous year. Consolidated earnings per share for ZS stocks also increased sharply. Annual earnings (EPS) rose from $ 0.08 to $ 0.14 cents a year.
Demand for its services is still high, and as the company pursues new markets, it will likely see revenue and earnings growth in the years ahead.
Again, this is clearly more for his rich assessment. While this could affect the stock in the near-term, investors who see it as a long-term game should not see it as a breach of contract.
Assessment concerns can be overwhelming
ZM has a premium appraisal with a forward price to sales, or P / S, ratio of 38.7x, and a forward price-to-earnings, or P / E, ratio of 492.7x. Still, it may not be a cause for concern.
First, Zscaler is now taking steps that will enable it to flatten further. For example, it is seeing growth among larger enterprise customers. In addition, the company is moving beyond its core endpoint security business to new areas such as cloud app security.
Second, when it scales, its operating margins will see big improvements in the coming years. Consistent operating margins could rise to 20% -22% over the next three years.
Keep in mind though, that doesn’t mean stocks are going to see another big jump in price. Profits from here can be more gradual. A temporary fall in prices could also be on the horizon.
What analysts are saying about ZS stock
According to TipRanks, ZS stocks have a moderate buy rating. Out of 2 analysts’ ratings, 11 out of 16 rated it a buy and seven analysts gave it a hold rating.
The average ZS price target is $ 309.43 per share, which means 13.3% potential side upward. Analyst price targets range from a low of $ 225 per share to a high of $ 345 per share.
The last row
Zscaler’s assessment could be richer today. Nevertheless, given its strong position in the secure web gateway space and the growing cyber security needs of the corporate world, it can be valuable.
Disclosure: At the time of publication, Thomas Neal did not have a position on any of the securities mentioned in this article.
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