Zscaler "well-positioned" for growth in the second half of FY 2025 - JPMorgan

Investing.com -- Zscaler (NASDAQ:ZS) is a "next generation" cyber security company that is well-positioned for future growth in the second half of its upcoming 2025 financial year, according to analysts at JPMorgan.

In a note upgrading their rating of the group to "Overweight" from "Neutral," the analysts added that its shares are trading at a discount to its "high growth" peers and historical valuation levels.

"Investors have recently become more concerned about competition in [Zscaler]’s markets, the impact of a challenging macro on execution, and loss of talent due to recent sales management changes. However, recent fundamental performance, conversations with peers and partners at recent industry events (including RSA and Zenith Live) have helped us develop a more constructive view," the analysts wrote.

They argued that Zscaler's "scale and architecture" enable it to compete with emerging peers in a cybersecurity market they estimate to be worth $96 billion.

The firm, which forecast fourth-quarter revenue and profit above Wall Street expectations in May, has been a beneficiary of higher spending by businesses on digital security during a time of increasing online threats and a boom in enthusiasm around artificial intelligence.