Wells Fargo analysts said in an investor note on Friday that Zscaler (NASDAQ:) is the company’s top pick for software infrastructure in 2023.
Analysts said they believe the company, which is rated overweight with a price target of $160, is the most resilient to a challenging macro environment.
“We are well-positioned to capitalize on the biggest growth drivers of the year: Zero Trust and digital transformation,” he said.
“How many ways can we slightly increase operating and free cash flow margins while maintaining revenue growth of 30% or more over the next 12 months, allowing the company to continue to exceed the ‘Rule of 50’? We believe there will be,” the analyst wrote.
“ZS’s share price is down 65% in 2022 and is currently trading at just 6.5x EV/CY24E sales (7.4x the peer group average), making us an attractive entry point. We repeat the OW rating: 160 PT dollars,” they concluded.
Zscaler shares fell 0.37% in Friday’s session.