I often stay away from high-flying stocks as they’re in the euphoric phase, trading mostly on momentum. However, I don’t show away from these plays at all once they stumble, and once we’re able to assess the underlying fundamentals and assign a reasonable valuation
Zscaler: Tremendous Opportunity In This Slide
Summary
- I recommend investors to buy the dip in Zscaler after a ~25% slide in the stock this year.
- Zscaler slid further when its FY25 outlook slightly missed Street expectations, but its billings results foreshadow stronger growth ahead than its guidance might currently imply.
- The company has seen stabilization in its sales attrition as well, which may help it deliver a series of beat-and-raise quarters as it begins FY25.
- Though not cheap at ~9x forward revenue, Zscaler enjoys tremendous secular tailwinds and is a high-quality company overdue for a rebound.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ZS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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