- Zscaler stock jumps 21% on guidance raise.
- ZS stock is now down just 1% on the year.
- CEO Jay Chaudhry raised revenue guidance by 5%.
- Fiscal year guidance raised by $30 million.
Zscaler (ZS), known for its zero-trust cloud architecture and competitive cybersecurity offerings, saw its shares shoot up on Monday after the company surprised the market by raising their fiscal Q3 guidance. Zscaler does not even report the quarter's results until June 3 – more than three weeks away. ZS stock rose 21% to above $108 in Monday morning's regular session.
A number of other high-profile cybersecurity firms followed suit. Palo Alto Networks (PANW) stock rose 3%, while CrowdStrike (CRWD) jumped 6%. Fortinet (FTNT) also rose more than 6% last Friday on an earnings beat and guidance raise. Wall Street is starting to believe that cybersecurity is the safest section of the growth stock matrix. This price action commenced despite all three major indices dropping between 0.05% and 0.2% on Monday. The S&P 500 is doing better than the NASDAQ, which is to say that value is besting growth despite cybersecurity firms rallying.
Zscaler stock news: Q3 revenue guidance raised by 5%
Zscaler management hiked their fiscal third quarter revenue guidance from a midpoint of $397 million to a midpoint of $417 million or slightly more than 5%. They also raised their prediction of adjusted income from operations from a midpoint of $55.5 million to $62 million. CEO Jay Chaudhry now thinks billings for the quarter will rise almost 40% YoY to $480 million.
Chaudhry now thinks fiscal 2023 revenue will arrive about $30 million higher than before in a range between $1.587 billion and $1.591 billion.
“Our preliminary third quarter results exceeded the high end of our guidance range," Chaudhry said in a statement. "We had a strong finish to the quarter as the high ROI of adopting the Zscaler Zero Trust Exchange platform continues to resonate with customers and prospects in this challenging macro environment."
Zscaler stock was down more than 20% year to date before Monday's surge. At the time of writing, the shares have only lost 1% YTD. Even with the welcome spike in the share price though, the ZS stock price is down 43% over the past year. Due to high growth rates and praise from analysts, the stock took off to impressive heights during the pandemic.
Back in early April, Needham analyst Alex Henderson was undeterred by the faltering share price. While Zscaler was trading around $105, Henderson said that Zscaler would double its operating margin and grow revenues at a 30%+ long-term rate. Henderson gave the stock 100% upside with his $210 price target.
Zscaler stock forecast
Well, I cannot say I see $210 over the next twelve months, but Zscaler stock sure looks like its primed for a further rally. A close above the March 31 swing high at $117.78 will confirm that the trend is in place. In the meantime, there could be some consolidation in Zscaler stock as short-term traders take their profits off the table.
However, that consolidation will allow the Relative Strength Index (RSI) to fall back into neutral territory, allowing for the next stage of the rally. After all, the RSI jumped from 31 to 61 just in Monday's session. It will quickly reach 70, overbought territory, and then require some sideways action to cool off.
After the consolidation, expect institutional investors to jump back in, pushing ZS stock back to $135 and $142.50 – both points of resistance earlier in the year.
ZS daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades sideways near 1.0900 amid cautious optimism
EUR/USD trades sideways near 1.0900 on Tuesday. The US Dollar looks to stabilize amid cautious optimism, as uncertainty over the US presidential election outcome lingers. US ISM Services PMI is also in focus, as Americans head to the polls.
GBP/USD clings to modest gains below 1.3000, awaits US election result
GBP/USD trades marginally higher on the day but remains below 1.3000 after finding support near 1.2950 on a broadly subdued US Dollar. Traders eagerly await the outcome of the US presidential election, refraining from placing fresh bets on the major.
Gold holds steady below $2,750 as markets gear up for US election
Gold attracts dip-buyers after touching a one-week low on Tuesday and trades above $2,740. XAU/USD draws support from a combination of factors. Fed rate cut bets, declining US bond yields and subdued USD demand continue to act as a tailwind for the precious metal.
Crypto markets brace for volatility in tight race between Trump and Harris
The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.