Zscaler stock soars after Barclays upgrade, propelled by robust revenue growth
Zscaler (NASDAQ:ZS) saw its stock rise by 4.3% on Monday, following an upgrade from Barclays from underweight to overweight and a near-term price target set at $190. This surge continues the stock’s impressive recovery, which has seen it increase by 52% year-to-date (YTD), bouncing back from a slump in the previous year. Notably, Zscaler’s market cap stands at 25.18B USD according to InvestingPro data, and the company has experienced a large price uptick over the last six months, as noted by InvestingPro Tips.
The tech firm’s robust recovery can be attributed to a 43% year-on-year (YoY) revenue increase for the fiscal quarter ending July 31, with a reported revenue of 1616.95M USD for the last twelve months as per InvestingPro. The rise in revenue was driven by an uptick in cyberattacks, prompting Zscaler to introduce AI-based solutions and partner with CrowdStrike Holdings (NASDAQ:CRWD) to offer healthcare security solutions. However, it’s worth noting that the company’s revenue growth has been slowing down recently, as indicated by InvestingPro Tips.
Innovative offerings such as Zero Trust workload and data protection have been key in securing the Barclays’ upgrade. These new products are expected to sustain high growth rates for Zscaler moving forward. The company’s impressive gross profit margins, standing at 77.63% as per InvestingPro, further highlight the potential of these innovative solutions.
Over the past two years, Zscaler has managed to double its annual recurring revenue to over $2 billion. The company has also significantly improved its free cash flow position, increasing it from less than $100 million to $333 million. This substantial growth in free cash flow further underscores the company’s strong financial performance and its ability to generate sustainable profits. Additionally, Zscaler operates with a moderate level of debt and its liquid assets exceed short term obligations, as highlighted by InvestingPro Tips, providing further evidence of its strong financial standing.
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