With cybersecurity threats escalating in frequency and sophistication, the demand for advanced security solutions is reaching new heights. As organizations worldwide prioritize safeguarding their digital assets, companies at the forefront of cybersecurity innovation are poised for significant growth.
- ZS shares are experiencing downward pressure. See the full story here.
Zscaler Inc (NASDAQ:ZS) is strengthening its position in zero-trust with its platformization strategy and in AI with the Red Canary acquisition, according to Morgan Stanley.
The Zscaler Analyst: Analyst Meta Marshall upgraded the rating from Equal-Weight to Overweight, while raising the price target from $280 to $320.
The Zscaler Thesis: Gartner estimates that 47% of enterprises are set to adopt secure access service edge (SASE) by 2027, up from the current 14%, which would be "a huge catalyst for the space," Marshall said in the upgrade note.
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Zscaler is a market leader, with a 32% share in the zero-trust network access (ZTNA) market, which is critical to the SASE market, and this positions the company to "continue growing wallet share," he added.
The Red Canary acquisition, which closed on Aug. 1, helps Zscaler enter the Managed Detection and Response (MDR) market, "which is set to see meaningful growth as enterprises try to automate the Security Operations Center (SOC) against a growing number of more advanced threats with AI," the analyst wrote. This is likely to be a growing investment area going forward, he added.
Although the stock is up 50% year-to-date, it trades roughly in line with Zscaler's security peers, even though the company enjoys better positioning and growth opportunities, Marshall stated.
ZS Price Action: Zscaler shares were down 1.31% at $273.42 at the time of publication on Tuesday. The stock is trading within its 52-week range of $153.44 to $318.45, according to Benzinga Pro data.
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