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In the world of protecting computers, smartphones, datacenters, and enterprises, the common theme seems to be “newer, different and better.” Zscaler, Inc. (NASDAQ: ZS) has been an overwhelming win. Its 2018 initial public offering price of $16 was gobbled up by investors. Despite pricing above the $13 to $15 price range, the lowest this stock has traded in 2018 was $24.76 and the current share price of $37.25.

With a Thomson Reuters consensus analyst target price of $37.90 and a post-IPO high of $43.98, some investors and analysts believe Zscaler can go higher. With a $4.45 billion market cap, many investors will want to keep in mind that Zscaler reportedly turned down a $2 billion buyout bid from Cisco Systems Inc. (NASDAQ: CSCO) just before its IPO.

A fresh report from FBN Securities is signaling that Zscaler could go much higher. FBN initiated coverage with an Outperform rating and assigned a $45 price target. That price target is $7 higher than the consensus analyst target and matches the street-high target.

According to FBN, and to other prior very positive post-IPO reports, Zscaler is a leader in the burgeoning cloud security market. The firm sees a total addressable market (TAM) of about $17.7 billion as of 2018. That figure is versus expected consensus 2018 revenues of $185 million. The FBN report cites that TAM as follows (approximate dollars):

• secure web gateways ($2.5 billion);
• firewalls ($11.5 billion);
• data loss prevention ($1 billion);
• and others.

With a subscription and support sales model, most of Zscaler’s business comes from its Zscaler Internet Access solution. Still, the company sees it moving customers toward the Transformation bundle as its highest-end solution and that this could reach 50% of the unit’s business in 3 to 4 years.

FBN analyst Shebly Seyrafi said:

We believe that the company has very strong visibility. For example, the company ended last quarter with a remaining performance obligation (RPO, which is basically the sum of billed and unbilled deferred revenue) of $305 million of which 54% is expected to be recognized over the next twelve months.  Therefore, approximately $165 million is already “in the bag”, and this represents approximately 70% of our estimated next twelve months revenue.

Additional positives from FBN were noted below:

• Recent channel checks are positive;
• Unique, user-centric (vs. network-centric) approach to security;
• Strong position in Gartner’s Magic Quadrant for secure web gateways;
• The cloud is growing rapidly, but it introduces security challenges that Zscaler can address.
• Upsell potential.

As far as revenue expectations, FBN sees revenues of $184.8 million in 2018, followed by $246.3 million in 2019 and $318.8 million in 2020.

Zscaler ended up 1.8% at $37.25 on Tuesday, versus a post-IPO trading range of $24.76 to $43.98. Its Thomson Reuters consensus analyst target price is $37.90.