Zscaler (ZS) PT Lowered to $320 at Scotiabank

Scotiabank analyst Patrick Colville lowered the price target on Zscaler (NASDAQ: ZS) to $320.00 (from $334.00) while maintaining a Sector Outperform rating.

The analyst commented: "We reiterate our Sector Outperform rating on Zscaler after a very decent organic ARR performance in F1Q, though bottom line results were slightly underwhelming. With management no longer disclosing Red Canary financial details, bears will point to the lack of pin-point visibility into the quality of F26 growth - between acquired revenue vs. core offerings. Furthermore, we think bullish investors will have been playing for a larger ARR F26 guidance increase. With this noise to work through, its hard to underwrite near-term multiple expansion. But, we believe >10% organic new ARR growth could be achievable in F26, as our extensive checks point to Zscaler as the clear leader in SASE, with no evidence of heightened competition in the very large enterprise market in which Zscaler leads. For investors with a medium-term horizon, we think the risk reward definitely skews positive on Zscaler as a growth compounder."

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