Zscaler Inc. (NASDAQ:ZS) stock edged slightly lower on Tuesday despite receiving an upbeat comment from Mizuho Securities. The Japan-based investment banking firm raised its Zcaler stock price target from $250 per share to $280, implying an upside potential of 16.7%.
The stock now trades at around $240 per share, a few levels below its all-time high of $249.71 reached earlier in August. Mizuho analysts said the company’s billings could grow by 43% this year as companies move to strengthen online security checks.
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Zscaler shares are up 22.80% this year and more than 93% over the last 12 months. However, the bull run could continue if the company performs according to expectations in the coming quarters.
Should you buy Zscaler shares in August 2021?
From a valuation perspective, Zscaler shares seem steeply priced at a forward P/E ratio of 437.82. Moreover, analysts expect its earnings per share to fall by a whopping 283% this year before increasing 17.80% next year. Therefore, value investors may opt for alternatives amid the high valuation.
However, Zscaler’s bottom-line could rise at an annual rate of more than 66% over the next five years, making the stock an attractive option for growth investors. As such, the ZS stock seems like a good investment for investors willing to overlook the short-term turbulence.
Technical overview: Zscaler stock price predictions for Q3 2021
Technically, Zscaler shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock price has surged several levels above the 100-day moving average.
However, it has recently pulled back to trade a few levels from overbought conditions of the 14-day RSI, leaving room for a rebound. Therefore, investors can target potential rebounds at approximately $247.81 or higher at $255.61. The key support levels are $234.69 and $226.59.
Bottom line: the case for buying Zscaler shares now
In summary, although analysts expect Zscaler earnings to fall by more than 283% this year, the prospective 5-year annual growth rate of about 66.6% is appealing to growth investors. Therefore, the stock could be compelling to investors willing to overlook the bumpy ride in the short term.
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