Goldman Sachs Reiterates Neutral Rating on Zscaler (ZS)
Goldman Sachs analyst Gabriela Borges reiterated a Neutral rating and $177.00 price target on Zscaler (NASDAQ: ZS).
The analyst comments "Zscaler is indicated -12% AH post 4QFY EPS. Management guided for FY25 billings growth of 19-20% yoy, 1% above the Street; guidance for revenue to be +21% yoy and operating margin to be ~21% (at the midpoint) were in line with the Street. Zscaler expects FY25 billings to be weighted toward 2H, citing macro headwinds in 1H24 and 1H23 driving lower non-cancellable billings to be collected in 1H24 (non-cancellable billings are typically tied to Year 2 and 3 of a 3-year contract, but billed annually). We also believe the company is seeing an ongoing structural shift to enterprise business, which drives more back-end loaded fiscal years, and is also being impacted by a ramping sales productivity cycle. We maintain a Neutral rating: we are positive on Zscaler's SASE positioning, but look to gauge normalized billings growth as its core product cycle moderates and as cross sell ramps, particularly given that 2H25 guidance already implies acceleration."
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Shares of Zscaler closed at $193.19 yesterday.