Zscaler, Palo Alto should have 'rock solid' results, Wedbush says
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Zscaler (NASDAQ:ZS) and Palo Alto Networks (NASDAQ:PANW) are scheduled to report quarterly results later this month and Wedbush Securities believes the two cyber security companies will post "rock solid" results, as the shift to the cloud and federal spending continues to be tailwinds.
Analyst Dan Ives, who rates both stocks outperform and has a $400 price target on Zscaler and $630 price target on Palo Alto Networks, respectively, noted that channel checks on both have been "extremely bullish," due in part to the shift to cloud architecture.
"While the Fed driven risk-off environment remains, the underlying growth stories around cyber security are unmatched to what we have seen the last decade with ZS, PANW, along with TENB, CYBR, FTNT, VRNS, and SAIL our core cyber security basket approach to own in this tech tape," Ives wrote in a note to clients.
Regarding Zscaler, Ives added that the company is "leading the way to the cloud" for chief information security officers, as a number of "larger transformational cyber security deals" have been signed on both the enterprise and federal fronts that are likely to help it beat Wall Street expectations. 
"Across the board we are seeing an uptick in deal flow for ZS, as the company's unique product suite is in the sweet spot as more enterprises/governments shift workloads to the cloud," Ives added.
Zscaler shares were down nearly 0.5% to $284.43 in early Wednesday trade.
Concerning Palo Alto Networks, Ives added that the company's "cloud driven story" is just starting, and with recent high-profile hacks, this should help boost "deal flow and pipeline opportunities in the field."
"We believe this is a cloud cyber security re-rating story in motion and view Palo Alto's stock as having a strong upward trajectory over the next year as the Street starts to fully appreciate the cloud transformation playing out," Ives explained. 
Palo Alto Networks shares were off by slightly more than 1% to $521.03 on Wednesday.
Earlier this month, Wedbush highlighted Palo Alto Networks, along with Tenable (NASDAQ:TENB), as two of the top cyber security stocks for earnings season.