Zscaler COO’s ‘abrupt resignation’ should concern investors, says Morgan Stanley

Morgan Stanley analyst Hamza Fodderwala notes that Zscaler announced on Friday afternoon the “abrupt resignation” of COO Dali Rajic, which the firm contends “is a significant event and should concern investors for a few reasons.” Rajic was instrumental in building the Zscaler sales organization and many of the key sales hires were during his tenure and CRO transitions have a history of being disruptive, says the analyst. In addition, management guidance was not reiterated in last week’s press release, which was “surprising” given the sudden departure of a key C-level executive and the fact that preannouncing quarterly results is “also well precedented for Zscaler,” added the analyst, who has an Equal Weight rating and $195 price target on Zscaler shares.