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Monday, Canaccord Genuity analysts increased the price target for Zscaler (NASDAQ:ZS) stock, listed on NASDAQ as ZS, to $305 from a previous $230, while maintaining a Buy rating. The revised target reflects optimism about the company’s growth prospects and financial performance. According to InvestingPro data, the stock is currently trading near its 52-week high of $276.49, with analysts’ targets ranging from $196 to $323.
The analysts highlighted the potential for an increase in growth in fiscal year 2026, particularly if small and medium-sized business (SMB) growth continues to rise and large enterprises enhance Zscaler’s strategic role in IT operations. They noted that improving profit margins have been a positive trend in recent quarters, with InvestingPro data showing impressive gross profit margins of 77.45% and strong revenue growth of 25.46% over the last twelve months.
Canaccord Genuity’s analysts expressed confidence that Zscaler could achieve 25% operating margins on an annual basis within the next three years. They view the company’s current valuation as offering a favorable position for growth as business traction improves. This outlook is supported by 35 analysts who have revised their earnings expectations upward for the upcoming period, according to InvestingPro.
The analysts also commented on the company’s valuation metrics, noting that the current valuation is approximately 2 times the expected sales for calendar year 2026 and 11 times the expected free cash flow for the same period. This is seen as a supportive valuation cushion as performance improves.
Overall, the analysts reiterated their Buy rating for Zscaler stock, emphasizing their positive outlook for the company’s future growth and profitability.
In other recent news, Zscaler has reported strong fiscal third-quarter results, with a notable year-over-year revenue increase of 23%, surpassing consensus estimates by 2%. The company’s billings grew by 25%, exceeding expectations by 3%, and its Remaining Performance Obligations expanded by 30%. Following these results, several analyst firms have adjusted their price targets for Zscaler. FBN Securities raised its target to $300, RBC Capital Markets to $304, Truist Securities to $300, KeyBanc Capital Markets to $310, and Needham to $310, each maintaining favorable ratings such as Outperform or Buy.
Analysts have noted Zscaler’s consistent performance, with RBC Capital highlighting the company’s revised full-year 2025 guidance and new CFO appointment. KeyBanc emphasized Zscaler’s strategic acquisition of Red Canary, aimed at enhancing its data management capabilities. Needham pointed out the company’s transformative efforts under its Chief Revenue Officer, focusing on deeper customer relationships. These developments reflect analysts’ confidence in Zscaler’s continued growth in the competitive cloud security market.
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