What Happened:
Shares of cloud security platform Zscaler (NASDAQ:ZS) jumped 5.02% in the morning session after Bank of America analyst Tal Liani said Microsoft's new identity and access management products are not a big threat to its cybersecurity business. The analyst said Microsoft's products are mainly focused on its cloud (Azure) and apps (Office 365), while Zscaler and Palo Alto Networks have more complete and flexible solutions for different markets and environments. After the initial pop the shares cooled down to $143.69, up 4.37% from previous close.
What is the market telling us:
Zscaler's shares are very volatile and over the last year have had 40 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was two months ago, when the stock gained 16.5% on the news that the company pre-announced an impressive "beat and raise" quarter. Preliminary third-quarter results exceeded analysts' revenue, and operating income estimates. In addition, management raised full-year guidance for revenue, calculated billings, and operating income. Founder and CEO, Jay Chaudhry, added to the optimism, stating that "the high ROI of adopting the Zscaler Zero Trust Exchange platform continues to resonate with customers and prospects in this challenging macro environment."
Zscaler is up 30.2% since the beginning of the year, but at $143.69 per share it is still trading 25.8% below its 52-week high of $193.60 from September 2022. Investors who bought $1,000 worth of Zscaler's shares 5 years ago would now be looking at an investment worth $3,610.
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