- Zscaler reported a robust FQ3'22 earnings release and raised guidance for FY22. But, its underlying metrics suggest growth could slow further.
- The market has digested its premium multiple significantly, as it has gotten it right. As a result, the company may have trouble sustaining its aggressive growth cadence.
- Our price action analysis suggests a near-term bottom. But, we have not observed a bear trap reversal price action. A series of key resistance levels are concerning.
- We revise our rating from Buy to Hold, with a price target of $180 (implied upside of 14.6%). We would wait for a double bottom bear trap before considering adding.
For further details see:
Zscaler: Slowing Growth And Steep Valuation Don't Bode Well