11:22 AM EST, 12/03/2024 (MT Newswires) -- Zscaler ( ZS ) investors are likely still "skeptical" of a potentially steep acceleration in H2 billings growth despite a fiscal Q1 beat, Morgan Stanley said in a Tuesday note.

The cybersecurity firm's fiscal 2025 guidance implied a 23% billings growth in H2, an acceleration from fiscal Q1 billings growth of 13%, according to the note.

"In light of sales org disruption and increased competition, investors are wary of the implied acceleration in back half," Morgan Stanley said.

While fiscal Q1 billings growth topped consensus estimates of 10%, it was a "lighter beat than usual" due to mechanical headwinds stemming from active contracts, Morgan Stanley said.

However, "while the market is getting more competitive, Zscaler ( ZS ) consistently sees larger deals and strong win rates," the note added.

Morgan Stanley lowered Zscaler's ( ZS ) price target to $205 from $215 and maintained an equalweight rating on the stock.

Shares of the company were down 4.5% in recent Tuesday trading.

Price: 199.20, Change: -9.32, Percent Change: -4.47