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On Friday, FBN Securities analyst Shelby Seyrafi updated the firm’s outlook on Zscaler stock, raising the price target to $300 from the previous $230. The Outperform rating for the company was maintained following a report of robust fiscal third-quarter results. The stock, currently trading at $271.07, has delivered an impressive 39.19% return year-to-date, according to InvestingPro data.
Zscaler, a cloud-based security company with a market capitalization of $41.92 billion, reported a year-over-year revenue increase of 23%, which was 2% higher than the consensus estimates. Billings also saw a significant rise, growing by 25% compared to the same period last year and surpassing consensus by 3%. The company’s Remaining Performance Obligations (RPO) expanded by 30% year-over-year, outpacing the analyst’s expectations by six percentage points. InvestingPro data reveals an impressive gross profit margin of 77.45% and a "GOOD" overall financial health score.
The company’s Annual Recurring Revenue (ARR) reached approximately $2.9 billion, marking a 23% year-over-year growth. This performance indicates that Zscaler is on a clear path to exceed $3 billion in ARR in the current quarter. Seyrafi highlighted the company’s consistent performance, noting that Zscaler did not experience a decline in April, a month that can often be softer for businesses.
The upward revision in Zscaler’s price target reflects the analyst’s confidence in the company’s continued strong performance and its ability to sustain growth in the competitive cloud security market. Zscaler’s shares are traded on the NASDAQ under the ticker symbol (NASDAQ:ZS).
In other recent news, Zscaler has reported impressive third-quarter fiscal year 2025 results, with a 23% year-over-year revenue increase to $678 million and calculated billings rising 25% year-over-year to $785 million. The company’s operating margins reached 21.6%, and its annual recurring revenue (ARR) grew by 23% year-over-year, setting the stage to surpass $3 billion ARR by the end of the fourth quarter. Following these robust results, Zscaler’s full-year 2025 guidance has been revised upward, and several analyst firms have adjusted their price targets accordingly. Rosenblatt Securities increased their price target to $315, Needham and KeyBanc both raised theirs to $310, while Truist Securities and RBC Capital set theirs at $300 and $304, respectively, all maintaining their Buy or Outperform ratings. Analysts have highlighted Zscaler’s strategic acquisitions, such as Red Canary, and new initiatives like the Z-Flex purchasing program, which contributed significantly to contract value. The appointment of a new Chief Financial Officer and a strengthened go-to-market strategy have also been positively noted. Zscaler’s platform continues to gain momentum, with demand for its Zero Trust security solutions driving growth. The company’s strategic positioning and recent achievements have bolstered analysts’ confidence in its continued expansion and success in the cybersecurity sector.
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