Zscaler (ZS) Gains Following 'Another Stellar Performance,' Analysts Raise PTs

Shares of Zscaler (NASDAQ: ZS) are up about 3% in pre-market Friday after the company delivered better-than-expected FQ4 earnings.

ZS said it made a profit of $0.14 per share to top the analyst estimate of $0.09. Sales for the quarter came in at $197.1 million versus the consensus estimate of $186.82 million.

"We delivered outstanding results for the fourth quarter, with a record number of large deals across diverse sectors driving 57% revenue growth and 70% billings growth year over year, finishing the fiscal year with strong business momentum," said Jay Chaudhry, Chairman and CEO of Zscaler.

For the ongoing quarter, Zscaler is projecting EPS of $0.12 per share, in line with the consensus. Revenue is seen at $211 million at the midpoint of the guidance, higher than the analyst estimates of $199.7 million.

On a full-year basis, EPS is seen between $0.52 and $0.56, lower than the consensus of $0.56. Revenue is projected in the range of $940 and $950 million, versus the consensus of $905.8 million.

Mizuho’s Gregg Moskowitz raised the price target on the Buy-rated ZS to $320.00 per share from the prior $280.00 on “another stellar performance.”

“ZS reported a very strong F4Q, as billings growth of 70% materially exceeded consensus expectations of low 40s growth. Large customer momentum is clearly building, and growth among the $100K+ and $1M+ ARR cohorts has accelerated in each of the last four quarters. FY22 billings/revenue guidance was well above Street but looks conservative. We reiterate that ZS's unique cloud proxy security architecture should enable it to thrive in an increasingly digital-enabled world. We also expect significant improvements in monetization, particularly as newer offerings (namely, ZDX and ZCP) gain traction. Despite a premium valuation, ZS is strongly positioned, and we see healthy upside as the co. grows into its opportunity,” Moskowitz said in a client note.

Cowen analyst Shaul Eyal also raised the price target to $314.00 per share from the prior $255.00 on the Outperform-rated stock, after witnessing strength across the board.

“ZS remains focused on its $72B TAM opportunity going vertically and horizontally. As the company continues to benefit from a meaningful displacement as well as new greenfield opportunities we view it as further growing its clout within the SASE and zero trust security markets,” Eyal wrote in a note sent to clients.

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