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Zscaler Jumps As Earnings Beat Has Brokerages Reiterating Buy

Stock MarketsMay 26, 2021 07:33AM ET
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By Dhirendra Tripathi

Investing -- Zscaler (NASDAQ:ZS) shares were up over 10% in Wednesday’s premarket as two brokerages reiterated their ‘buy’ on the stock, spurred by the company raising its outlook while announcing third quarter earnings a day earlier.

It’s been a good period for cybersecurity solutions providers like Zscaler and Palo Alto as more people work from home, throwing up higher demand from both companies and individuals for their products as they seek more safety and security for their IT systems.

Wedbush has a target of $240 for the stock while Canaccord Genuity sees it at $250. The targets are almost 39% and 43% higher from the stock’s closing level on Tuesday.

Zscaler’s announcement it will acquire Smokescreen Technologies, an attempt to go for higher-margin business from clients by offering cybersecurity solutions against sophisticated, highly targeted attacks and ransomware was also adding to the positive sentiment for the stock.

The company expects total revenue of $660 million-$664 million in fiscal 2021. It sees non-GAAP income from operations between $71 million and $72 million.

While disclosing its second quarter numbers in February, the company had forecast its annual revenues to come between $634 million and $638 million. Non-GAAP income from operations was then seen in the range of $59 million- $61 million.

Zscaler grew its third quarter revenues 60% year-on-year to $176.4 million. It more than doubled its non-GAAP net income to $21.4 million from $10.3 million a year ago. Both were higher than the company’s own estimates given in February for the third quarter.


Zscaler Jumps As Earnings Beat Has Brokerages Reiterating Buy

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