Zscaler Initiated at Neutral by B. Riley with $275 Price Target

Zscaler has been initiated with a Neutral rating by B. Riley Securities, despite recent outperformance. The firm set a $275 price target and noted that investors should wait before buying. Zscaler's recent growth has been impressive, but investors should exercise caution before making a purchase decision.

Zscaler, a leading cybersecurity company, has been initiated with a Neutral rating by B. Riley Securities. Despite recent outperformance, the firm advises investors to wait before buying, setting a $275 price target on the stock. This neutral stance reflects a balanced view of Zscaler's prospects, acknowledging both its strong performance and intense competition in the market.

Zscaler has shown impressive growth, with a 25% year-over-year revenue increase and a strong market position. The company's proprietary technology platform, known for its scalability and ability to perform multiple cybersecurity services, has been a significant driver of this growth. B. Riley Securities highlights Zscaler's strong sales execution, which has attracted new accounts and expanded into its large installed base [1].

However, B. Riley also notes the intense competition in the cybersecurity sector. Established rivals like Palo Alto Networks and newer entrants such as Netskope and Cato Networks pose significant challenges to Zscaler's growth. The firm advises investors to wait for a pullback in ZS for greater visibility into the competitive landscape or for additional catalysts such as validation of Zscaler's AI technologies or other new products.

Zscaler's shares have risen by 54% this year, compared to a 13% gain in the Amplify Cybersecurity ETF. Despite this performance, B. Riley believes that Zscaler's shares are fairly valued, trading at 56 times estimated 2027 earnings, which is in line with other leading cybersecurity firms [2].

In conclusion, B. Riley's Neutral rating and $275 price target reflect a cautious investment opportunity. While Zscaler's strong performance and growth drivers are notable, the intense competition and current valuation make the stock a cautious investment opportunity.

References:
[1] https://www.ainvest.com/news/zscaler-initiated-neutral-275-price-target-riley-securities-2508-79/
[2] https://www.ainvest.com/news/riley-initiates-coverage-zscaler-neutral-rating-275-price-target-2508/