Exane BNP Paribas Initiates Neutral Coverage on Zscaler

Exane BNP Paribas initiates coverage of Zscaler with a Neutral recommendation while indicating significant upside potential in the stock. The report highlights key financial projections that could impact investors' strategies regarding Zscaler.

Date: 09-10-2024

AI Rating: 6

Financial Projections and Analyst Sentiment

The report states that Exane BNP Paribas has initiated coverage of Zscaler with a Neutral rating. Interestingly, despite this neutral stance, the average one-year price target for Zscaler is projected at $223.76 per share. This represents a potential upside of 26.43% based on its latest closing price of $176.98. Such projections can significantly influence investor perceptions, as the upside may encourage some to invest in Zscaler based on anticipated price appreciation.

Revenue Growth and Earnings Per Share (EPS)

The projected annual revenue for Zscaler stands at $2,644 million, reflecting a robust increase of 21.97%. Alongside this, the expected non-GAAP EPS is 2.33, which gives insight into profitability. Both the revenue growth and EPS projections, if realized, would likely bolster investor confidence in Zscaler's operational performance.

Institutional Ownership and Changes

The report notes a decrease in the number of funds reporting positions in Zscaler by 1.51% in the last quarter. However, total shares owned by institutions increased by 0.78% to 76,783K shares. This mix of decreasing fund numbers and increasing shares held can be interpreted as a mixed sentiment among institutional investors.

Determining Market Sentiment

The report includes a put/call ratio of 0.94, indicating a bullish outlook on the stock among options traders. Additionally, certain funds like American Century Companies and Goldman Sachs Group have increased their holdings significantly, suggesting some institutional confidence in Zscaler's future prospects.

Summary of Ratings

In summary, while the Neutral recommendation by Exane BNP Paribas may seem cautious, the robust revenue growth projection, positive EPS outlook, and bullish sentiment from options trading provides a somewhat favorable backdrop. Investors may view this as a period of interest, weighing the potential upside against the institutional sentiment.

Stocks: ZS