Zscaler (ZS) Spending Likely to Increase as Comps Become More Difficult - Needham & Company
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Needham & Company analyst Alex Henderson reiterated a Strong Buy rating and $345.00 price target on Zscaler (NASDAQ: ZS) expecting travel and growth investments to accelerate and should restrain margin leverage.
The analyst stated "There is always a trade-off between growth and Operating leverage. Over the last year, the environment artificially held back spending, particularly on selling T&E. As the environment normalizes,d we expect T&E to rebound as the company's direct to C-Suite selling motion is suited to in person meetings. Further, Zscaler is determined to drive strong growth and continues to drive aggressive staffing of the Sales team." "We expect strong growth even against these tough comps, but as noted on the FY4Q/CY2Q call, Zscaler is focused on driving growth more than leverage. Despite the tough comps, we think the top line momentum is continuing. Competitively, Zscaler continues to outpace alternative technologies. We see Cloud Direct as a winning architecture and a winning strategy."
Shares of Zscaler closed at $267.70 yesterday.
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