Zscaler, Inc. (NASDAQ:ZS) Analysts Are Pretty Bullish On The Stock After Recent Results
The yearly results for Zscaler, Inc. (NASDAQ:ZS) were released last week, making it a good time to revisit its performance. It was a pretty bad result overall; while revenues were in line with expectations at US$431m, statutory losses exploded to US$0.89 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Zscaler
Taking into account the latest results, the current consensus from Zscaler's 21 analysts is for revenues of US$586.9m in 2021, which would reflect a substantial 36% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.86. Before this latest report, the consensus had been expecting revenues of US$558.2m and US$0.60 per share in losses. While this year's revenue estimates increased, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target rose 30% to US$147, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Zscaler at US$198 per share, while the most bearish prices it at US$90.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zscaler's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Zscaler'shistorical trends, as next year's 36% revenue growth is roughly in line with 36% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So it's pretty clear that Zscaler is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Zscaler. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Zscaler. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zscaler analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Zscaler has 4 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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