ZS Stock Alert: What to Know as Zscaler Unveils Partnership With IBM

Zscaler (ZS) shares are inching higher on Oct. 5 after the cybersecurity company announced a new strategic alliance with International Business Machines (IBM). The deal integrates ZS’s Autonomous Application Shield within its Zero Trust Exchange framework with IBM and Red Hat’s Lightwell platform.

The IBM update arrives at a time when Zscaler stock has already been in a sharp uptrend, currently up a remarkable 70% versus its year-to-date low. 

What the IBM Deal Means for Zscaler stock

The IBM collaboration targets one of enterprise cybersecurity’s key threat vectors: the gap between when software vulnerabilities are publicly disclosed and when patches are actually deployed. 

As malicious actors increasingly leverage artificial intelligence (AI) to execute attacks faster than traditional IT defenses can respond, this window represents a massive operational risk.

Zscaler’s Zero Trust Exchange architecture embedded in IBM and Red Hat software will equip enterprise clients with dynamic, automated application shielding during remediation periods. 

In short, co-selling alongside IBM expands ZS stock’s addressable market across large enterprise environments, solidifying its position in AI-driven cybersecurity and driving recurring sales from hybrid cloud infrastructures.  

Are ZS Shares Worth Buying Today?

Despite the IBM news, investors must weigh persistent insider selling (36 sell transactions against 0 buys in the trailing 12 months) of Zscaler shares against the firm’s 25% revenue growth in fiscal Q4.

More importantly, on a GAAP basis, the cybersecurity specialist remains unprofitable, with a net loss of $3.4 million in the latest reported quarter. 

From a technical perspective, however, ZS looks like a compelling short-term investment. 

As of this writing, it sits handily above its major moving averages (MAs), with an RSI in the late 50s indicating it has more room to the upside before hitting overbought conditions that often trigger a pullback. 

Caution Is Warranted in Playing Zscaler

Caution is warranted also because Wall Street analysts believe ZS shares are fully priced at a forward price-to-earnings (P/E) multiple of about 284x. 

According to Barchart, while the consensus rating on Zscaler remains at “Strong Buy,” the mean target of about $207 is roughly in line with the current price. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.