Zscaler is the IBD Stock of the Day as the cybersecurity firm becomes actionable coming off a rebound from its 10-week moving average. Zscaler stock has climbed 41% in 2023.
On the stock market today, ZS stock rose 3.1% to close at 155.59. Morgan Stanley on Friday upped its price target on Zscaler stock to 155 from 145.
Zscaler has been a share gainer in a cybersecurity market called Secure Access Service Edge, or SASE. The security tools support remote workers and branch offices.
SASE cloud security platforms bring together both security and networking technologies. But, Zscaler's cloud-based platform is expanding beyond SASE.
Zscaler Stock Bounces Off 10-Week Line
With a bullish move off its 10-week, or 50-day moving average, ZS stock becomes actionable.
On the other hand, if Zscaler closes below the 50-day line on Friday, that could become a sell signal.
Zscaler stock has been trading sideways since mid-June. And the stock has not forged a clear base pattern.
But the relative strength line of ZS stock has held up, and is near 2023 highs.
Zscaler Stock: Technical Ratings
Zscaler stock holds a stellar Composite Rating of 98. The best growth stocks have a Composite Rating of 90 or better. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths.
Also, ZS stock has an Accumulation/Distribution Rating of B-. That metric analyzes price and volume changes in a stock over the past 13 weeks of trading. The B- rating indicates more funds are buying than selling.
The A/D Rating, on an A+ to E scale, measures institutional buying and selling in a stock. Further, A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
San Jose, Calif.-based Zscaler sells cloud-based computer security services via 150 data centers worldwide. Customers are able to route their business workloads and app traffic to the data centers where Zscaler's security software checks data traffic for malware.
ZS Stock: Expanding Platform
The company garners most of its revenue from Zscaler Internet Access, or ZIA, a cloud-based replacement for on-premises web security gateways.
"We believe the company's proxy-based security architecture is well-suited for large enterprises transitioning to a cloud-centric operating model," said Oppenheimer analyst Kidron Singh, in a recent report.
Zscaler Private Access, or ZPA, is a newer SASE product and drives new customer growth. Further, the ZPA service replaces virtual private networks, or VPNs, that companies typically use to support remote work.
In addition, analysts generally describe Zscaler as a leading "zero trust" security service provider. In a zero-trust model, cybersecurity firms verify the identity of network users and limit access to applications.
At the cybersecurity firm's annual customer conference — Zenith Live 2023 in June — Zscaler announced its entry into the identity threat detection and response market.
At Deutsche Bank, analyst Brad Zelnick said in a report: "Emerging products continue to advance as a percentage of the mix as customers look to Zscaler as a platform for consolidation."
Barclay's Saket Kalia has a similar view. "We think the story at Zscaler in fiscal 2024 will be a growing non-ZIA/ZPA business," he said in a report.
Zscaler Fiscal Q4 Results Beat
Zscaler reported fiscal fourth-quarter earnings, revenue and billings topped Wall Street targets.
Fiscal fourth-quarter profit jumped 156% to 64 cents a share on an adjusted basis. In the July quarter, revenue rose 43% to $455 million, the company said. ZS stock analysts expected earnings of 49 cents per share on sales of $430.4 million.
Also, billings rose 38% to $719.3 million, compared with estimates for $660 million.
For fiscal 2024, which starts with the October-ending quarter, Zscaler says it expects earnings in a range of $2.20 to $2.25, ahead of estimates for $2.11 a share.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
