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On Friday, Bernstein SocGen Group updated its outlook on Zscaler (NASDAQ:ZS) stock, increasing the price target from $244.00 to $251.00 while maintaining an Outperform rating. The adjustment follows Zscaler’s fiscal third-quarter earnings for 2025, which outperformed expectations amidst a challenging macroeconomic environment. The stock, currently trading at $251.11, sits near its 52-week high of $259.40, having delivered an impressive year-to-date return of 39.19%. According to InvestingPro data, analyst targets for the stock range from $196.23 to $295.00.
Zscaler’s recent earnings report showcased a significant revenue beat of over $12 million, with an upward revision of the full-year revenue forecast by approximately $17.5 million at the midpoint. With impressive gross profit margins of 77.86% and revenue growth of 27.77% over the last twelve months, the company’s performance stands in stark contrast to some other cybersecurity firms that experienced more difficult sales cycles and had to adjust their guidance accordingly in April, as noted in Bernstein’s analysis of companies like Palo Alto and SentinelOne (NYSE:S). InvestingPro subscribers can access 13 additional key insights about Zscaler’s financial health and growth prospects.
The firm highlighted Zscaler’s successful sales strategy transformation, which has led to robust expansion within its existing customer base. Despite a slight dip in the Net Retention Rate (NRR) to 114% from 115% in the previous quarter, Bernstein’s analysis indicates that the contribution of existing customers to the in-quarter revenue growth has increased significantly compared to the second quarter. This marks the strongest third-quarter performance in terms of existing customer expansion in several years for Zscaler.
Bernstein’s positive outlook on Zscaler is underscored by the company’s ability to navigate the pressures of the current macroeconomic climate effectively. The analyst’s commentary points out that while other cybersecurity companies reported challenges, Zscaler’s earnings suggest a resilient business model capable of sustaining growth through strategic customer relationships and sales initiatives.
Investors may find reassurance in Zscaler’s demonstrated resilience and the growth in revenue contributions from its existing customer base. The updated price target by Bernstein reflects confidence in Zscaler’s continued performance and its strategic positioning within the cybersecurity industry. With a market capitalization of $38.85 billion and analysts expecting profitability this year, the company appears well-positioned for growth. For a comprehensive analysis of Zscaler’s valuation and growth prospects, investors can access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Zscaler reported impressive financial results for the third quarter of 2025, with earnings per share (EPS) of $0.84, surpassing analyst forecasts of $0.76. The company’s revenue also exceeded expectations, reaching $678 million, marking a 23% increase year-over-year. Additionally, Zscaler’s annual recurring revenue (ARR) grew by 23% to $2.9 billion. In a strategic move, Zscaler announced the acquisition of Red Canary for $675 million, aiming to enhance its security operations capabilities. Meanwhile, Piper Sandler adjusted its rating for Zscaler, downgrading the stock from Overweight to Neutral, while raising the price target to $260 from $235. The downgrade reflects concerns about future growth prospects and potential integration challenges following the acquisition. Piper Sandler’s analysts noted that despite Zscaler’s strong performance, the current valuation might not present the most attractive entry point for investors. These developments highlight significant milestones and challenges for Zscaler as it navigates its growth trajectory.
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