Zscaler (ZS) checks were "mostly positive" ahead of fiscal Q2 earnings next week with investors optimistic over its setup for the rest of the fiscal year, UBS said in an earnings preview emailed Tuesday.

The firm expects any commentary around sales productivity improvements, sales maturity, and participation in firewall displacement opportunities to be "positive."

Alternatively, the firm said it would keep an eye out for any updates on US federal spending given the broad downsizing, including the US Department of Defense.

UBS noted a "healthy debate" in conversations with investors over fiscal H2 billings, with analysts expecting 7% quarter-over-quarter growth in Q3, in contrast to 3% decline seen in the same period over the past four years, UBS said.

Still, the firm pointed to commentary by the company's management of a "significant H2 ramp" in contracted billings which would extend into Q3. As a result, the firm said it was estimating 5% quarter-over-quarter growth in Q3.

UBS kept its $250 price target for the company with a buy rating.

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