Long Trade Idea
Enter your long position between $150.33 (the intra-day low before its breakout) and $158.78 (yesterday’s intra-day high).
Market Index Analysis
Zscaler (NASDAQ:ZS) is a member of the NASDAQ 100 Index.
This index trades inside a bearish price channel with decreasing bullish trading volumes.
The Bull Bear Power Indicator for the NASDAQ 100 Index turned bullish but remains below its descending trendline.
Market Sentiment Analysis
Equity futures point higher as markets await today’s Fed interest rate decision. While no change is expected, any comments regarding future monetary policy, especially after surging oil prices due to the Iran war, are likely to move markets. China granted NVIDIA approval to sell its second-most powerful AI chip, H200. Concerning earnings, Micron Technology, General Mills, and Macy’s are on deck today.
Zscaler Fundamental Analysis
Zscaler is a cloud-based cybersecurity company. It continues to make small but strategic acquisitions to grow its product and services portfolio, including international ones.
So, why am I bullish on ZS following its nearly 60% correction?
I turned bullish on Zscaler amid improving valuations and the January launch of its AI Security Suite, which includes AI asset discovery, shadow AI detection, and Zero Trust controls for AI workloads. runtime guardrails, and prompt hardening. Its SPLX acquisition, AI Protect, and MCP gateway add to its AI security leadership. I am equally bullish on its rising customer base featuring 728 customers with $1M+ annual recurring revenue (ARR), and 3,886 customers with $100K+ ARR. The recent Singtel partnership expanded its services into Southeast Asia, where I see more growth opportunities.
Metric | Value | Verdict |
P/E Ratio | 40.98 | Bearish |
P/B Ratio | 11.42 | Bearish |
PEG Ratio | 2.05 | Bullish |
Current Ratio | 1.90 | Bearish |
ROIC-WACC Ratio | Negative | Bearish |
Zscaler Fundamental Analysis Snapshot
The forward price-to-earning (P/E) ratio of 40.98 makes ZS an expensive stock. By comparison, the P/E ratio for the NASDAQ 100 Index is 36.27.
The average analyst price target for ZS is $234.79. It suggests excellent upside potential with acceptable downside risks.
Zscaler Technical Analysis
Today’s ZS Signal
Zscaler Price Chart
The ZS D1 chart shows price action breaking out above its horizontal support zone.
It also shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator is bearish with an ascending trendline, nearing a bullish crossover.
The average bullish trading volumes are higher than the average bearish trading volumes.
ZS pushed higher as the NASDAQ 100 Index corrected, a significant bullish trading signal.
My ZS Long Stock Trade
ZS Entry Level: Between $150.33 and $158.78
ZS Take Profit: Between $229.00 and $234.79
ZS Stop Loss: Between $116.67 and $125.75
Risk/Reward Ratio: 2.34
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