Zscaler could benefit from the growth of an emerging form of cybersecurity, according to Barclays. The firm upgraded the cloud security stock to overweight from equal weight and upgraded its price target to $190 from $176. Barclays' forecast implies nearly 24% upside from Friday's $153.30 close. Analyst Saket Kalia said the company's growing Zscaler for Workloads platform as well as a growth opportunity in the secure access service edge cybersecurity segment underpinned the upgrade.
"iven these trends, we raise our FY24 billings estimate and extend our model out to FY26E with 20% billings growth and healthy EBIT/FCF margin expansion – with our increased confidence in long-term market growth, we're now able to shift our valuation from sales to FCF ," Kalia said. The analyst added that growth in SASE cybersecurity could grow to become the same size or larger than regular network security protocols in three years, which could help propel Zscaler going forward.