ZS - Zscaler: Buy The Dip As Growth Drivers And Management Execution Will Drive Upside
2024-04-14 07:32:23 ET
Summary
- Zscaler continues to gain market share and deepen adoption among enterprise customers, with growing ARR, success in the federal market vertical and improving profitability.
- The company is projected to grow its revenue and non-GAAP operating income by 31% YoY and 64% YoY respectively in FY24.
- While Zscaler faces competitive threats, it is investing in R&D to deliver robust product innovations and mitigate AI-assisted cybersecurity risks.
- I believe that the company should grow to $5B in revenue as per target by FY28, as it takes an account-centric approach to spearhead growth, making it a “buy”.
Introduction & investment thesis
I initiated a Buy rating on Zscaler (ZS) on January 3, 2024. My bull thesis was predicated on my belief that Zscaler should continue to gain market share as it deepens adoption of its solution suite among enterprise customers and expands its profit margins, given its robust product innovation as well as the secular growth in enterprise cybersecurity spend....
Zscaler: Buy The Dip, As Growth Drivers And Management Execution Will Drive Upside