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Analysts Favor Zscaler and Confluent Amid Revenue Growth

A recent report indicates strong buy ratings for Zscaler and Confluent from analysts, highlighting their attractive revenue growth and potential AI-driven market success despite significant declines from their peak valuations in 2021.

Date: 
AI Rating:   7

Analysis of Key Metrics

The report indicates a strong consensus among analysts for both Zscaler and Confluent, with buy ratings dominating. This suggests positive investor sentiment and a potential increase in stock prices as analyst recommendations often influence market movements.

Zscaler Performance

Zscaler's revenue growth is noteworthy, having generated $2.167 billion in fiscal 2024, reflecting a 34% increase compared to fiscal 2023. This surpasses management's guidance, indicating strong operational performance and enhancing its attractiveness as an investment. The company benefits from a significant addressable market valued at $96 billion, suggesting further growth potential.

Confluent's Market Position

Confluent, with a trailing 12-month revenue of $865 million, operates in a large and growing addressable market of $60 billion. The ongoing trends in AI and data streaming technology position it well for growth. The stock's price-to-sales (P/S) ratio has decreased to 7.1, indicating it may be undervalued compared to its earlier valuation peak during the tech boom in 2021.

Stock Valuation and Investor Interest

Both companies' reduced P/S ratios—Zscaler at 11.8 and Confluent at 7.1—imply more favorable valuations compared to their previous peaks, pointing towards possible market recovery as conditions improve.

Overall Sentiment

The overall positive trends in revenue growth for both Zscaler and Confluent can be anticipated to drive investor decisions moving forward. Investors should consider this analysis while examining their investment strategies in the tech sector.

Stocks:  ZS CFLT