Zscaler’s momentum has picked up, with a 10% increase in share price over the past month and a 59% total shareholder return over the past year. Investors are eager to know if this stellar growth justifies its current price or if the market is already factoring in years of future expansion. Some analysts believe Zscaler might be undervalued, with a fair value estimate of $324.66, while others question whether its price-to-sales ratio of 18.5x is too high.
The company’s growth prospects are driven by its differentiated AI security and agentic operations products, which are addressing new security challenges in the AI/ML traffic market. However, integrating with major cloud providers or facing competition from established cybersecurity firms could dampen its projected growth.
Investors must weigh the risks and rewards of Zscaler’s expansion plans against the premium valuation of 18.5x compared to its peer group average. While some see an upside surprise, others worry that expectations may slip, leading to disappointment.
Source: https://simplywall.st/stocks/us/software/nasdaq-zs/zscaler/news/zscaler-zs-assessing-valuation-after-recent-share-price-gain