Zscaler's competitive positioning looks better than Wall Street apparently thinks, says a KeyBanc Capital Markets analyst who upgraded the cybersecurity stock to over weight. Zscaler stock, which had been down 22% in 2024, rose on Thursday.
On the stock market today, Zscaler stock climbed 2.9% to near 178 in early trading.
In addition, Zscaler is a big player in cloud-based Secure Access Service Edge, or SASE. The Zscaler Private Access (or ZPA) cloud service replaces virtual private networks to support remote work.
San Jose, Calif-based Zscaler provides cloud-based services via 150 data centers worldwide. The company's web security gateways inspect customers' data traffic for malware.
Leader In SASE Market
In the SASE market, Zscaler competes with Palo Alto Networks, Cloudflare, Fortinet and others.
"Our Q1value added reseller (distributor) survey showed Zscaler back at No. 1 for best positioned SASE vendor and 27% of respondents cited ZS as a top performing security vendor in the quarter vs. 0% last quarter," said KeyBanc analyst Eric Heath in a report.
He added that investors worried about Microsoft's entry into the SASE market.
"While it's still too early to know how it plays out, we view the competitive concern from the upcoming Microsoft product release as lower," Heath said.
Zscaler Stock Technical Ratings
"We are positive on Zscaler's leadership in SASE, a large market that remains early innings, with SASE having a concentrated market structure long term."
Also, Zscaler stock holds a Relative Strength Rating of 63 out of a best-possible 99, according to IBD Stock Checkup.
Zscaler stock holds an Accumulation/Distribution Rating of D-minus, with E the lowest possible ranking. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
