Tuesday, Canaccord Genuity maintained a Buy rating on shares of Zscaler (NASDAQ: NASDAQ:ZS) and increased the price target to $230 from $220. The adjustment follows the company's raised guidance for fiscal year 2025 and is grounded in the stock's valuation at approximately 12 times enterprise value to sales on the firm's 2025 estimates.
According to InvestingPro data, Zscaler boasts impressive gross profit margins of 78% and has achieved strong revenue growth of 34% over the last twelve months.
The update comes amidst news of CFO Remo Canessa's retirement, which initially caused an 8% drop in the company's shares during after-hours trading. Despite the initial market reaction, Canaccord Genuity sees the dip as an opportunity to invest in a company they consider a core long-term holding.
Canessa's decision to retire is based on personal reasons, and he has reassured stakeholders of a smooth transition as he continues his role until a successor is found. InvestingPro's analysis indicates the company maintains a healthy financial position with a GOOD overall health score and operates with moderate debt levels.
Canaccord Genuity's stance remains positive as they believe Canessa's departure will not significantly disrupt Zscaler's operations. The firm's confidence is further bolstered by recent discussions with Canessa during the callbacks, which confirmed the orderly nature of his retirement.
The stock price target revision to $230 also reflects the company's performance and the optimism of Canaccord Genuity regarding Zscaler's future growth. The firm's analysis suggests that the current share price dip presents an attractive entry point for investors.
In summary, Canaccord Genuity's updated price target for Zscaler is based on the company's raised future guidance and the firm's expectation that the CFO's departure will not hinder the company's progress. The firm encourages investors to view any weakness in the stock as a chance to buy into what they believe is a solid investment for the long term.
With analyst targets ranging from $177 to $270, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
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