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Investing.com - Barclays raised its price target on Zscaler (NASDAQ:ZS) to $320.00 from $300.00 on Wednesday, while maintaining an Overweight rating following the company’s fourth-quarter results. The cybersecurity company, currently valued at $43.14 billion, is trading slightly above its InvestingPro Fair Value.
The investment bank based its revised target on a rebuilt revenue model focused on Annual Recurring Revenue (ARR), projecting that Zscaler could reach nearly $5 billion in ARR by fiscal year 2028, assuming flat-lined organic net new ARR through that period. This projection aligns with the company’s impressive 25.46% revenue growth over the last twelve months.
Barclays estimates that of Zscaler’s current $3 billion in ARR, approximately $1 billion comes from three growth vectors—ZTE, DSE, and AI Security—which are growing at twice the rate of the $2 billion in core ARR from products like ZIA and ZPA. The company maintains robust gross profit margins of 77.46%, according to InvestingPro data, which shows 8 additional key metrics and insights available for subscribers.
The firm believes the core business is growing in the high teens percentage range, while the three growth vectors are expanding at mid-30s percentages, based on market rates for Secure Access Service Edge (SASE) solutions.
Barclays also addressed the reconciliation of $140 million in Red Canary ARR to the $83 million recognized on August 1, and estimated that Zscaler’s change in ARR methodology represents a difference of tens of millions in ARR.
In other recent news, Zscaler Inc . reported a significant miss in its Q4 2025 earnings per share (EPS), which fell well below expectations. The company posted an EPS of -$0.11, contrasting sharply with the forecasted $0.80, resulting in a surprise of -113.75%. Despite this earnings miss, Zscaler’s revenue provided a slight positive surprise, reaching $719 million compared to the expected $706.95 million. These recent developments have drawn attention from investors and analysts alike. The earnings announcement has also led to discussions among analyst firms about the company’s future prospects. While the revenue figures were slightly above expectations, the considerable miss on EPS has raised questions about the company’s financial performance. Investors are closely monitoring the situation as they consider the implications of these results.
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