Yahoo Finance Zscaler, Inc. Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For Next Year
As you might know, Zscaler, Inc. (NASDAQ:ZS) just kicked off its latest second-quarter results with some very strong numbers. Revenues and losses per share were both better than expected, with revenues of US$101m leading estimates by 2.2%. Statutory losses were smaller than analysts expected, coming in at US$0.23 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
See our latest analysis for Zscaler
Taking into account the latest results, the latest consensus from Zscaler's 20 analysts is for revenues of US$416.0m in 2020, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 56% (on a statutory basis) to US$0.79. Yet prior to the latest earnings, analysts had been forecasting revenues of US$410.9m and losses of US$0.50 per share in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
As a result, there was no major change to the consensus price target of US$64.70, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Zscaler analyst has a price target of US$89.00 per share, while the most pessimistic values it at US$40.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Zscaler's revenue growth is expected to slow, with forecast 16% increase next year well below the historical 42%p.a. growth over the last three years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 12% next year. So it's pretty clear that, while Zscaler's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$64.70, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Zscaler. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zscaler analysts - going out to 2024, and you can see them free on our platform here.
You can also see our analysis of Zscaler's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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