Zscaler sees bullish views from Wedbush boosted by AI demand

[Zscaler headquarters in Silicon Valley]
Sundry Photography/iStock Editorial via Getty Images

Wedbush raised the price target on Zscaler's (ZS [https://seekingalpha.com/symbol/ZS]) stock to $350 from $330 while maintaining its Outperform rating on the shares of the cloud security provider.

Wedbush noted that Zscaler is in a strong position with more cloud and AI deals.

Analysts led by Daniel Ives said, "we believe the company’s product innovation, AI strategy, and go-to-market engine still have more runway with Zero Trust and AI security driving incremental demand with enterprises seeing a massive acceleration in AI traffic."

The analysts noted that, based on their checks, Zscaler is separating itself as a larger winner in the cloud security space as demand for its product portfolio strengthens and the AI opportunity grows as it looks to disrupt the $100B security market.

The company is seeing incremental momentum from the Red Canary acquisition to deliver its AI-powered SOC as it boosts its go-to-market efforts and improves its deal pipeline with data privacy remaining top-of-mind for enterprises, according to the analysts.

Ives and his team added that Zscaler's Z-Flex program also continues to be key to the company’s sales strategy and sees traction as it leads to larger, multi-year deals for both new and existing customers, which significantly increases its pipeline moving forward without fundamentally changing the company’s financial model.

Zscaler's recently announced partnership with HCLTech — where its Zero Trust platform will integrate with HCLTech’s Cybersecurity Fusion Center platform to create a scalable, cloud-first solution with implementation of zero trust and SASE architecture — further positions the company well, the analysts added.

"ZS continues to be a leader in Zero Trust architecture with its innovative platform approach that provides a unified solution to help enterprises address the growing security challenges that come with the dynamic AI landscape. We continue to believe ZS is a well-positioned beneficiary of the AI Revolution with the company remaining a core name on the Ives AI 30 list," said Ives and his team.

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