4. Zscaler, Inc. (NASDAQ:ZS)
Number of Hedge Fund Holders: 51
Zscaler, Inc. (NASDAQ:ZS) is a leading cloud security company that provides cloud-based security solutions for organizations of all sizes. The company is an innovator in the cloud security space, providing advanced solutions that can help organizations protect their data, secure their systems, and defend against cyber threats. With its comprehensive suite of cloud security solutions, Zscaler, Inc. (NASDAQ:ZS) is well-positioned to continue to grow and expand in the future and is therefore one of the best cybersecurity stocks to buy now.
On December 1, Zscaler, Inc. (NASDAQ:ZS) posted market-beating earnings for the first quarter of fiscal 2023. The company reported an EPS of $0.29 and outperformed estimates by $0.03. The company’s revenue for the quarter amounted to $355.55 million, up 54.24% year over year and ahead of Wall Street expectations by $14.76 million. Shortly after the company’s earnings release, ZS MKM Partners analyst Catharine Trebnick updated her price target on Zscaler, Inc. (NASDAQ:ZS) to $180 from $190 and reiterated a Buy rating on the shares.
At the close of the third quarter of 2022, 51 hedge funds were long Zscaler, Inc. (NASDAQ:ZS) and held stakes worth $1.33 billion in the company. This is compared to 40 hedge funds in the previous quarter with stakes worth $1.02 billion. The hedge fund sentiment for the stock is positive. As of September 30, D E Shaw is the most prominent shareholder in the company and has a position worth $189.9 million.
Here is what Artisan Partners had to say about Zscaler, Inc. (NASDAQ:ZS) in its third-quarter 2022 investor letter:
“Our notable adds in the quarter included Zscaler, Inc. (NASDAQ:ZS) , Etsy and BioNTech. Zscaler provides cloud-based Internet security solutions. The company recently delivered 61% revenue growth and expects to grow nearly 40% in 2023 (ahead of expectations). Despite solid fundamental momentum, shares have underperformed this year as investors have grown concerned about slowing demand for enterprise software as the broader global economy slows. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. From 2018 to 2020, losses from cybercrimes grew 67% to $1 trillion, and some estimate it could reach $10 trillion by 2025. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a more remote workforce (versus pre-pandemic) make operating IT infrastructures increasingly complex. Zscaler’s scalable, cloud-based security platform is a more secure and efficient way to connect users and applications, which eliminates the need for several layers of security (firewalls, VPNs, etc.) developed and built over the last couple of decades. For these reasons and with shares trading at an attractive discount to our PMV estimate, we added to our position.”
