Zscaler Stock Surges After Barclays Upgrade, Driven by Strong Revenue Growth
Zscaler (NASDAQ:) witnessed a remarkable 4.3% increase in its stock on Monday, following an upgrade from Barclays from underweight to overweight. Barclays also set a near-term price target of $190 for the company. This surge signifies the stock’s impressive recovery, with a year-to-date increase of 52%, bouncing back from a previous slump. Notably, Zscaler’s market capitalization stands at 25.18B USD, according to InvestingPro data. Over the past six months, the company has experienced a significant price uptick, as highlighted by InvestingPro Tips.
Robust Recovery Driven by Revenue Growth
Zscaler’s robust recovery can be attributed to its outstanding revenue growth. The company reported a 43% year-on-year increase in revenue for the fiscal quarter ending July 31. Over the last twelve months, Zscaler generated a revenue of 1616.95M USD, as per InvestingPro data. This surge in revenue was primarily driven by a rise in cyberattacks, prompting Zscaler to introduce AI-based solutions and partner with CrowdStrike Holdings (NASDAQ:) to offer healthcare security solutions. However, it’s worth noting that the company’s revenue growth has recently shown signs of slowing down, as indicated by InvestingPro Tips.
Innovative Offerings and Impressive Gross Profit Margins
Barclays’ upgrade was fueled by Zscaler’s innovative offerings, including Zero Trust workload and data protection. These new products are expected to sustain high growth rates for the company in the future. Furthermore, Zscaler boasts impressive gross profit margins, currently standing at 77.63% according to InvestingPro. This highlights the potential of the company’s innovative solutions and further strengthens its position in the market.
Strong Financial Performance and Growth
Over the past two years, Zscaler has demonstrated significant growth in its annual recurring revenue, surpassing $2 billion. Additionally, the company has substantially improved its free cash flow position, increasing it from less than $100 million to $333 million. These remarkable achievements underline Zscaler’s strong financial performance and its ability to generate sustainable profits. Moreover, Zscaler operates with a moderate level of debt, and its liquid assets exceed short-term obligations, as highlighted by InvestingPro Tips. This further solidifies the company’s strong financial standing.
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