What happened

Shares of Zscaler (NASDAQ:ZS) have popped today, up by 6% as of 12:20 p.m. EDT, after the company received a bullish initiation from a Wall Street analyst. RBC Capital kicked off coverage of Zscaler with an outperform rating alongside a $130 price target.

So what

Analyst Matthew Hedberg believes that Zscaler is well positioned to disrupt the $20 billion market for legacy cybersecurity services. The coronavirus outbreak has likely accelerated existing trends that will benefit the cloud security tech company, according to Hedberg.

Zscaler logo

Image source: Zscaler.

"We believe Zscaler is a disruptor in cloud-based security that could see mega-trends accelerate by five years post-COVID," the analyst wrote in a research note to investors. "And while the stock is +137% YTD, we believe Zscaler should remain part of a disruptive growth portfolio as we see the company as part of a next-gen tech stack that could expand the [total addressable market] beyond current estimates and point to continued upside to revenue/profitability estimates over several years."

Now what

COVID-19 has accelerated many existing secular trends in technology, such as a broad shift to remote work and increased demand for things like e-commerce and other cloud services. That has subsequently translated into strong demand for services that support companies embarking on digital transformations -- like cybersecurity, for example.

Longer-term, RBC Capital believes that spending on cloud security offerings could rise from $20 billion to over $35 billion by 2024.