Zscaler Faces Stock Decline Amid Weak Earnings Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 03 2024
0mins
Source: investopedia.com
Zscaler Inc's shares fell 5.03% as the stock hit a 5-day low, reflecting ongoing investor concerns.
The company's recent guidance for 2027 indicates an annualized recurring revenue (ARR) growth of only 16% to 17%, down from 21% last quarter, leading to a significant drop in stock price. This disappointing outlook has raised questions about Zscaler's ability to sustain growth without further acquisitions, especially following the acquisition of Symmetry Systems and the shift to a usage-based pricing model.
Despite these challenges, Zscaler's current stock price at 6.5 times revenue expectations may present an attractive investment opportunity for patient investors, particularly as the company anticipates a potential revenue growth reacceleration post-2027.
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Analyst Views on ZS
Wall Street analysts forecast ZS stock price to rise
30 Analyst Rating
24 Buy
6 Hold
0 Sell
Strong Buy
Current: 150.420
Low
260.00
Averages
325.62
High
390.00
Current: 150.420
Low
260.00
Averages
325.62
High
390.00
About ZS
Zscaler, Inc. is a cloud security company. The Company has developed a platform incorporating core security functionalities needed to enable fast and secure access to cloud resources based on identity, context and an organization's policies. Its Zscaler Zero Trust Exchange is a cloud-native platform that securely connects users, devices, applications and workloads, including artificial intelligence (AI) agents, without relying on hub-and-spoke network architecture and firewall-centric security. It delivers its solutions using a software-as-a-service (SaaS) business model and sells subscriptions to customers to access its cloud platform, together with related support services. Its services include Zscaler Internet Access (ZIA), Zscaler Private Access (ZPA), and Zscaler Digital Experience (ZDX). ZIA provides secure access to externally managed applications, including SaaS applications and internet destinations, regardless of device, location or network.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Q2 Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, close to Q1's 30% growth, primarily driven by AI spending, which is expected to account for nearly 60% of S&P 500 earnings-per-share growth, providing an optimistic outlook for investors.
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See More
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See More
