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On Friday, BTIG analyst Gray Powell updated the firm’s outlook on Zscaler (NASDAQ:ZS) stock, raising the price target from $252.00 to $298.00, while reiterating a Buy rating. The adjustment follows Zscaler’s release of its fiscal third-quarter 2025 results, which surpassed expectations and provided a fourth-quarter billings forecast in line with analysts’ predictions. The stock, currently trading near its 52-week high of $259.40, has delivered an impressive 39% return year-to-date. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, though analysts maintain a bullish consensus with price targets ranging from $196 to $295.
Zscaler reported billings of $784.5 million, marking a 24.9% year-over-year increase for the third quarter of fiscal 2025, exceeding BTIG’s estimate of $761.2 million and the consensus estimate of $759.7 million. The company’s performance notably outperformed the scenario BTIG had previewed on May 22, 2025, where the upside was projected at $780 million. For the fourth quarter of fiscal 2025, Zscaler’s guidance implies billings of $1,142.6 million, reflecting a 25.4% year-over-year growth, which aligns with street forecasts. InvestingPro data reveals the company maintains impressive gross margins of 77.86% and has achieved robust revenue growth of 27.77% over the last twelve months. Get access to 13 additional exclusive ProTips and comprehensive financial metrics with InvestingPro.
Powell highlighted that despite recent reports from other cybersecurity firms like Palo Alto Networks (NASDAQ:PANW), Okta (NASDAQ:OKTA), and SentinelOne (NYSE:S), which indicated a slowdown in deal activity in April and conservative future projections due to economic concerns, Zscaler’s results stood out positively. The analyst pointed out that while there is a growing presence of Secure Service Edge (SSE (LON:SSE)) offerings in the market, Zscaler’s competitive position in large enterprise engagements remains unchanged. Moreover, the company is seeing sustained platform momentum, with disclosures around Zero Trust Everywhere and branch office firewall replacement being particularly encouraging.
The analyst also mentioned that Zscaler’s products outside of its core Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA) offerings, such as Data Protection, Zscaler Digital Experience (ZDX), Cloud Workload, and Branch Connector, are nearing $900 million in Annual Recurring Revenue (ARR) and account for over 30% of the company’s total revenue. Based on these factors, BTIG has slightly increased its estimates for Zscaler’s fiscal year 2026. The firm’s continued endorsement of a Buy rating indicates confidence in Zscaler’s ongoing growth and market position. With a market capitalization of $38.85 billion, Zscaler remains a significant player in the cybersecurity sector. For detailed insights into Zscaler’s financial health and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro.
In other recent news, Zscaler has reported robust quarterly earnings, with a 25% year-over-year increase in billings and a 23% rise in revenue, surpassing analysts’ expectations. This strong performance has led to several analysts adjusting their price targets for the company. Evercore ISI raised its target to $290, citing Zscaler’s successful go-to-market strategy and strong demand environment. Morgan Stanley (NYSE:MS) increased its price target to $280, recognizing the company’s better-than-expected performance across most metrics. BofA Securities also raised its target to $285, highlighting the company’s sales productivity and introduction of new products as key factors in its success.
Bernstein increased its price target to $251, noting Zscaler’s ability to outperform expectations in a challenging macroeconomic environment. Despite these positive developments, Piper Sandler downgraded Zscaler’s stock rating from Overweight to Neutral, raising the price target to $260. The firm expressed caution about potential future challenges, including integration of recent acquisitions and guidance based on annual recurring revenue growth. Investors may find these updates indicative of Zscaler’s current market position and strategic direction amidst ongoing economic uncertainties.
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