Zscaler stock is back near a level not seen since January 2022. The leading cybersecurity provider continues to produce steady earnings and sales growth.
The IBD 50 Growth Stocks To Watch name is retreating by roughly 1% on Monday. Zscaler announced on Monday a proposed $1.5 billion private offering in convertible senior notes.
Zscaler operates a cybersecurity platform that protects internet usage, data centers, cloud environments, and apps. Its new platform, named Zscaler Zero Trust Exchange, securely connects individual users, devices, and applications.
The company operates more than 160 global data centers in 185 countries, with over 50 million users as of the end of April.
The IBD 50 and IBD Big Cap 20 name ranks No. 1 out of 34 stocks in the Computer Software-Security group. The group holds the 14th spot out of the 197 that Investor's Business Daily tracks.
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Zscaler Stock Catches Its Breath After Big Run
The stock continues to trade fairly tightly as its digests from a recent nine straight week climb. Shares seem to have found a level of support at the 300 price level.
The cybersecurity name formed a three-weeks-tight pattern with a 309.19 entry point. The formation offers a buy point best used to add to an existing position. Shares are in a buy zone up to 324.65.
Watch for Zscaler to possibly form a flat base as it trades sideways.
The cloud security company has outperformed 96% of names as seen in its 96 IBD Relative Strength Rating. Zscaler has climbed around 73% so far this year, according to MarketSurge chart data.
Its relative strength line leveled out in June after a robust climb from its April low.
The cybersecurity stock's volume surged, following Zscaler's earnings gap-up on May 30. This is reflected in its beefy 2.8 up/down volume ratio, indicating strong demand over the last 50 days.
Management owns a hearty 18% of Zscaler stock, while mutual funds hold 53% of shares. Its IBD Accumulation/Distribution Rating of B+ indicates fairly heavy institutional buying over the last 13 weeks.
Cybersecurity Leader Shows Steady Growth
On May 29, Zscaler topped fiscal third-quarter earnings and sales estimates, but its fiscal fourth-quarter revenue guidance came in a little light.
Analysts see sales growth averaging 20% over the next four quarters, which has decelerated modestly from prior quarters.
Its profit growth looks to be moderating after 159% growth in fiscal 2023 and 54% in fiscal 2024. Wall Street forecasts anticipate a 16% earnings increase in fiscal 2025 and a 14% rise in fiscal 2026.
Lastly, it holds 98 IBD Composite and Earnings Per Share Ratings.
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