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Zscaler Announces Intent to Acquire CSPM Company Cloudneeti

April 9, 2020 Harriet Lefton
Zscaler Announces Intent to Acquire CSPM Company Cloudneeti

Cloud security stock Zscaler (ZS) has today announced the intent to acquire Cloudneeti, to provide its customers with industry-leading data protection coverage. Shares of ZS, which have popped 39% year-to-date, fell slightly on the news.

Cloudneeti addresses Cloud Security Posture Management (CSPM), which revolves around identifying and preventing/ remediating misconfigurations across cloud environments.

This is becoming particularly important as companies make a continued shift to the cloud; a recent report by Trend Micro found misconfiguration as the number one risk to cloud environments.

“Cloudneeti augments Zscaler’s data protection capabilities and will dramatically improve organizations’ cloud security by discovering and eliminating some of the most common causes of data breaches and compliance violations,” said Jay Chaudhry, Chairman and CEO of Zscaler.

Baird analyst Jonathan Ruykhaver gives the deal his seal of approval. ““We believe it is important for Zscaler to make continued investment in improving its products longer-term to help the company maintain its strong reputation and position as a market leader” he wrote.

According to Ruykhaver, “The deal appears to be a nice move to strengthen Zscaler’s security functionality and points to the company’s commitment towards continuously improving its offerings.” With this in mind, the analyst reiterated his buy rating with a $70 price target.

Financial terms of the transaction, which is expected to close before the end of ZS’s fiscal third quarter, were not disclosed. Overall, the stock scores a Moderate Buy consensus on TipRanks with some analysts concerned that shares have moved too far, too fast. (See ZS’s stock analysis on TipRanks)

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