Scotiabank (TSX:BNS)'s confidence in Zscaler (NASDAQ:ZS) is bolstered by comprehensive checks with resellers and significant customers, which have provided insight into the demand and competitive environment for the company's services. Despite the stock's decline in after-hours trading, the firm views Zscaler's valuation, which stands at approximately 38 times its projected 2025 EBITDA, as reasonable for a top-tier asset in the cloud and security software sector.
The analyst's comments reflect a belief in the medium-term thesis for Zscaler, emphasizing the company's market leadership and growth potential in the SASE market. This sentiment persists even as the company navigates near-term challenges and transitions within its executive team.
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The firm acknowledged the potential impact of CFO Remo Canessa's retirement on the confidence in Zscaler's commitment to its fiscal year 2025 billings target, adding a layer of uncertainty. Despite this, the company has maintained robust revenue growth of 34.07% over the last twelve months. The firm's conviction in Zscaler's position as a leader in the Secure Access Service Edge (SASE) market, which is believed to be far from saturated, remains strong.
Scotiabank's confidence in Zscaler is bolstered by comprehensive checks with resellers and significant customers, which have provided insight into the demand and competitive environment for the company's services. Despite the stock's decline in after-hours trading, the firm views Zscaler's valuation, which stands at approximately 38 times its projected 2025 EBITDA, as reasonable for a top-tier asset in the cloud and security software sector.
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