After a terrible period for the market in the late summer and early fall, November was exactly what the doctor ordered for investors. Yet after a big bull rally during the first few weeks of the month, Wall Street looks as though it's ready to take a holiday nap. After making modest moves on Monday, stock index futures Tuesday morning were poised to ease lower very slightly.
The big gains earlier in the month also likely explained some of the price action within the market. Zscaler (ZS +6.79%) shares moved lower even after what appeared to be an extremely strong quarterly financial report from the cybersecurity provider. Yet Argenx (ARGX +1.62%) had to deal with some unquestionably bad news that sent its stock downward sharply. Here's the latest on both Zscaler and Argenx for you to consider.
Zscaler looks at an inevitable slowing of growth
Shares of Zscaler dropped almost 5% in premarket trading on Tuesday morning. The cybersecurity software platform provider released its fiscal first-quarter financial results for the period ended Oct. 31, and despite the company topping expectations and boosting guidance, shareholders still seemed nervous about the likely path forward.
Zscaler's numbers looked solid. Revenue of $497 million was up 40% year over year and easily topped Zscaler's previous guidance for between $472 million and $474 million. Similarly, adjusted earnings of $0.67 per share came in well ahead of the $0.48 to $0.49 per share guidance that the cybersecurity company had provided three months ago.
NASDAQ: ZS
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Moreover, Zscaler updated its guidance for the full 2024 fiscal year. The company now expects to see revenue of $2.09 billion to $2.1 billion for the year, with adjusted earnings of $2.45 to $2.48 per share. Those figures imply roughly 30% sales growth in fiscal 2024 compared to the previous year.
The problem, though, is that Zscaler saw revenue grow at nearly a 50% rate in fiscal 2023, so shareholders have had to come to grips with the fact that as the company's sales figures go up, it gets harder to sustain the same percentage growth rate. Yet with favorable trends like artificial intelligence helping to increase demand for its Zero Trust cybersecurity platform, Zscaler's results show that big enterprise customers apparently haven't pulled back on vital IT spending to as large an extent as some had feared.
Argenx sees a study fail
Shares of Argenx were down more sharply, falling 10% in premarket trading. The Dutch biotech company reported study results that disappointed its shareholders.
Argenx has been conducting its Advance-SC study, which is evaluating its Vyvgart Hytrulo treatment for adults with primary immune thrombocytopenia (ITP). Unfortunately, top-line results from the study indicated that it had failed to meet both primary and key secondary endpoints.
NASDAQ: ARGX
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Specifically, Argenx had hoped that patients taking Vyvgart Hytrulo would demonstrate a sustained platelet count response. However, the results actually showed that fewer patients taking the treatment had the intended response than in the placebo group. In addition, the treatment didn't result in significant changes in mean platelet count from the baseline or the intended change in standards from the International Working Group.
Even with the setback, Argenx is still expecting a regulatory decision in Japan for treating ITP. Moreover, with the biotech company looking at the treatment in over a dozen different autoimmune diseases, one study didn't have as large an impact as investors might be used to seeing from the typical biotech stock.
