Do Zscaler Inc. (NASDAQ: ZS) Fit In A Value Investing Philosophy?

UPWK stock
UPWK stock

The Vanguard Group, Inc. recently announced the acquisition of new stake in Zscaler Inc. (NASDAQ:ZS). The institutional investor has increased its shareholding in the Technology company by 8.12% to 6.58 million shares with purchase of 0.49 million shares. This fresh investment now brings its stake to 5.04% valued currently at $853.96 million. In addition, BlackRock Fund Advisors raised its holdings by 0.23 million to 3.31 million shares. And D. E. Shaw & Co. LP has lifted its position by 770.45% or 1.86 million shares – to 2.1 million shares.

With over 4.49 million Zscaler Inc. (ZS) shares trading Tuesday and a closing price of $159.36 on the day, the dollar volume was approximately $715.99 million. The shares have shown a positive weekly performance of 17.50% and its price on 09/01/20 gained nearly 11.18%. Currently, there are 129.68M common shares owned by the public and among those 71.38M shares have been available to trade.

An analysis of what Wall Street brokers have to say about the expected price targets for this stock gives us this picture: 25 analysts who have offered their price forecasts for ZS have a consensus price objective of $115.86. The analysts have set the share’s price value over the next 12 months at a high of $171.00 and a low of $73.00 should the stock experience a downside. Incidentally, analysts’ outlook for the Zscaler Inc. stock is 2.20 for the next 12 months. The average price target is -40.65% below its last price level and a downside to the estimated low will see the stock lose -118.3% over that period. But an upside of 6.81% will see the stock hit the forecast high price target while mean target price for the stock is $105.00.

Insiders at the company have transacted a total of 316 times over the past 12 months, according to data filed with the U.S. Securities and Exchange Commission (SEC). 68 of these insider trades were purchases, accounting for 9,680,810 shares. Insider sales of the common stock occurred on 248 occasions, with total insider shares sold totaling 9,626,840 shares.

The top 3 mutual fund holders in Zscaler Inc. are Vanguard Total Stock Market Index, Vanguard Small Cap Index Fund, and Vanguard Small Cap Growth Index F. Vanguard Total Stock Market Index owns 2.02 million shares of the company’s stock, all valued at over $262.5 million. The company sold 7188.0 shares recently to bring their total holdings to about 1.55% of the shares outstanding. Vanguard Small Cap Index Fund sold 13400.0 shares to see its total holdings shrink to 1.77 million shares valued at over $229.56 million and representing 1.36% of the shares outstanding. Vanguard Small Cap Growth Index F sold 5695.0 shares to bring its total holdings to over 1.08 million shares at a value of $139.61 million. Vanguard Small Cap Growth Index F now owns shares totaling to 0.82% of the shares outstanding.

Shares of Zscaler Inc. (NASDAQ: ZS) opened at $147.60, up $4.26 from a prior closing price of $143.34. However, the script later closed the day at $159.36, up 11.18%. The company’s stock has a 5-day price change of 17.50% and 48.37% over the past three months. ZS shares are trading 242.71% year to date (YTD), with the 12-month market performance up to 142.67% higher. It has a 12-month low price of $35.00 and touched a high of $146.93 over the same period. Currently, 4.49 million shares have been traded, compared to an average intraday trading volume of 3.10 million shares. The stock is trading above its simple moving averages at the SMA20, SMA50, and SMA200, as the current price level is off by 21.82%, 28.68%, and 104.21% respectively.

Institutional ownership of Zscaler Inc. (NASDAQ: ZS) shares accounts for 43.30% of the company’s 129.68M shares outstanding. Mutual fund holders own 23.01%, while other institutional holders and individual stakeholders account for 47.57% and 20.37% respectively.

It has a market capitalization of $20.45B. The earnings-per-share (ttm) stands at -$0.55. Price movements for the stock have been influenced by the stock’s volatility, which stands at 4.60% over the week and 3.89% over the month.

Analysts forecast that Zscaler Inc. (ZS) will achieve an EPS of $0.03 for the current quarter, $0.03 for the next quarter and $0.29 for 2021. The lowest estimate earnings-per-share for the quarter is $0.02 while analysts give the company a high EPS estimate of $0.04. Comparatively, EPS for the current quarter was $0.07 a year ago. Earnings per share for the fiscal year are expected to increase by 62.90%, and 37.62% over the next financial year.

If you are looking to buy this stock, then you may note that the average analyst recommendation by 25 brokerage firm advisors rate Zscaler Inc. (ZS) as a “Moderate Buy” at a consensus score of 2.20. Specifically, 12 Wall Street analysts polled rate the stock as a buy, while 11 of the 25 advise that investors “hold,” and 1 rated it as a “Sell.”

Looking at the support for the ZS, a number of firms have released research notes about the stock. Loop Capital stated their Buy rating for the stock in a research note on August 21, 2020, with the firm’s price target at $160. Deutsche Bank coverage for the Zscaler Inc. (ZS) stock in a research note released on August 20, 2020 offered a Buy rating with a price target of $171. Citigroup was of a view on July 09, 2020 that the stock is Buy, while RBC Capital Mkts gave the stock Outperform rating on July 06, 2020, issuing a price target of $130. Needham on their part issued Strong Buy rating on June 22, 2020.


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