Zscaler Inc (ZS)

Zscaler Inc. (ZS) has been placed on Evercore ISI's "Tactical Underperform" list ahead of its Q4 earnings report, citing cautious field checks and tempered growth expectations. While GuruFocus' GF Value™ suggests ZS is 42.6% undervalued, this is tempered by its current unprofitability and a P/S ratio significantly below its historical median. Insider selling and mixed guru activity further indicate caution for investors despite strong growth prospects.

Zscaler has expanded its partnership with Carahsoft Technology Corp. to offer its Zero Trust Exchange platform to U.S. SMB and mid-market segments, aiming to broaden its customer base beyond large enterprises. This move aligns with Zscaler's strategy to use channel partners and packaged Zero Trust offerings to reach underserved smaller organizations. The partnership could influence Zscaler's revenue growth, especially ahead of its September earnings release, though competition from larger cybersecurity vendors remains a significant risk.

Zscaler Inc (ZS) shares dropped 4.3% to $168.42, marking a significant year-to-date decline and a 37.5% drop over the past year. Despite its current unprofitability and cash-flow-negative status, GuruFocus's GF Value™ estimates the stock to be significantly undervalued at $293.42, suggesting a potential 42.6% upside. However, insider selling and a GF Score™ of 70/100, which highlights strong growth but weak profitability, prompt a cautious approach for investors.

UBS analyst Timothy Arcuri maintained a Buy rating on Broadcom (AVGO) with a $470.00 price target, highlighting a strong consensus rating and a 36.6% upside potential. Similarly, Guggenheim's John Difucci maintained a Buy rating on Zscaler (ZS) with a $214.00 price target, noting a strong analyst consensus and a 13.5% upside. Both companies are seen as strong buys in the Technology sector according to analyst reports.

Zscaler (ZS) saw an 8.5% increase in its share price due to strong demand for its AI security and Zero Trust solutions, along with momentum in usage-based AI security products and Z-Flex contracts. The company is projected to report significant year-over-year growth in both earnings and revenue in its upcoming report. While the stock currently holds a Zacks Rank #3 (Hold), investors are advised to monitor trends in earnings estimate revisions for future price movements.