Zscaler rises on Piper Sandler upgrade; security spending looks good
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Cybersecurity firm Zscaler (NASDAQ:ZS) was upgraded at Piper Sandler on Monday as security spending trends show strength. 
The firm upped its rating to Overweight from Neutral and its price target to $190 from $150. 
âThe company will continue to benefit from strong trends in security spending and network transformation momentum,â analysts Rob Owens and Ethan Weeks wrote in an October 2 note.
Zscaler (ZS) is a top beneficiary of further adoption of secure access service edge, or SASE, an architecture that delivers network and security as a service capabilities.
âWe expect this core growth driver to remain durable for the company over the coming years,â Piper Sandler added.
Zscaler (ZS) has seen consistent revenue growth and EPS improvement over the past several quarters. Shares are down 6% over the past 12 months, and are higher by 41% year-to-date. The company has the highest price-to-earnings ratio among peers, indicating that it may be overvalued. 
The total addressable market for Zscaler (ZS) is about $16B in three years, and with current minimal SASE adoption and a strong desire for it, that should lead the company to see âdurable growth with plenty of room for ZS to see success,â the firm said.
âSolid demand trends across both SASE and the emerging product set will drive upside to guidance as the coming fiscal year progresses,â Piper Sandler wrote.
Shares are up 2.8% in pre-market trading on Monday.
Analysts are largely cautious on Zscaler (ZS). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ZS a HOLD.

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