Zscaler (NASDAQ: ZS) was named as the top software pick for this year by top-rated Wells Fargo analyst Andrew Nowinski. The analyst is of the view that ZS is the “most resilient” to the current macroeconomic challenges.
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Nowinski noted that the cloud security company is “best positioned” to “maintain 30%+ revenue growth over the next 12 months, while modestly expanding Operating and Free Cash Flow margin, enabling the company to remain above the ‘Rule of 50.”
The Rule of 50 is the annual percentage growth in revenues when added to EBITDA as a percentage of revenue has to equal 50 or more.
The analyst also believes that spending on cybersecurity will remain “fairly strong” and is likely to grow in high single digits. Nowinski has a Buy rating and a price target of $160 on the stock, implying an upside potential of 54.1% at current levels.
ZS stock has plunged around 60% in the past year. However, analysts remain upbeat about the stock with a Strong Buy consensus rating based on 22 Buys and seven Holds.
