Zscaler Scales Up Sales to See Off Fiscal 2022; Maintain FVE; Shares Undervalued

We are maintaining our fair value estimate of $211 for narrow-moat Zscaler after the firm reported strong results to close out fiscal 2022. The better-than-expected results’ impact on our fair value estimate was neutralized by the firm’s expectation of fiscal 2023 revenue below our prior estimates. At the same time, however, we reiterate our confidence in Zscaler’s business and maintain our belief that the firm will continue to grow rapidly with the secular tailwinds of zero-trust security and digital transformations behind its back. Despite shares being up more than 11% after hours (after a 4% ascent during trading hours today), we still view the shares as undervalued.