TSX up after index logs fresh record high close
Investing.com - JPMorgan has raised its price target on Zscaler (NASDAQ:ZS) to $351.00 from $348.00 while maintaining an Overweight rating following the company’s fourth-quarter results. The cybersecurity giant, currently valued at $43.14 billion, has demonstrated impressive growth with revenues reaching $2.55 billion in the last twelve months. According to InvestingPro data, analyst targets for the stock range from $215 to $385, reflecting mixed sentiment about its current valuation levels.
Zscaler delivered better-than-expected revenue, billings, profitability, and free cash flow in the quarter, maintaining its impressive 77.46% gross profit margin. The stock initially declined in after-hours trading as annual recurring revenue (ARR) guidance appeared underwhelming, but JPMorgan noted this was partly due to a methodology change where Zscaler is no longer including ramped business in its ARR calculation. InvestingPro analysis indicates strong revenue growth of 25.46% year-over-year, though the stock appears to be trading above its Fair Value.
The investment bank views Zscaler’s initial fiscal year 2026 guidance as conservative, suggesting the new CFO is approaching the outlook with a philosophy similar to the former CFO. JPMorgan believes first-quarter guidance may be particularly conservative due to management’s cautious approach regarding potential Red Canary-related churn.
JPMorgan highlighted that Zscaler’s results reflect broader shifts in network security spending as enterprises reassess their network architecture ahead of an industry-wide firewall spending cycle, alongside ongoing cloud workload adoption and growing awareness of attack surface expansion from AI adoption.
The firm noted that Zscaler’s emerging products, including AI Security, Zero Trust Everywhere, and Data Security Everywhere, now account for over $1 billion in ARR, positioning the company to potentially gain recognition as a platform vendor alongside major competitors like Palo Alto Networks and CrowdStrike. For a deeper understanding of Zscaler’s competitive position and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which offers expert analysis of 1,400+ top stocks through intuitive visuals and actionable intelligence.
In other recent news, Zscaler has reported strong fiscal fourth-quarter results, with several metrics exceeding expectations. The company achieved a 32% year-over-year increase in billings, reaching $1,202 million, surpassing both BTIG and Street estimates. Additionally, Zscaler’s Annual Recurring Revenue (ARR) growth impressed analysts, prompting Barclays to raise its price target to $320, projecting significant ARR growth through fiscal year 2028. Stifel also raised its price target to $330, citing strong execution and demand for Zscaler’s expanding Zero-Trust portfolio. Evercore ISI increased its target to $320, noting the company’s fiscal year 2026 guidance exceeded market expectations, with management forecasting 22.5% total revenue growth. UBS, while lowering its price target to $350, maintained a Buy rating due to Zscaler’s strong performance metrics, including a 31% increase in Remaining Performance Obligations (RPO). BTIG reiterated its Buy rating and $365 price target, highlighting the company’s impressive quarterly performance. These developments reflect a positive outlook from analysts, driven by Zscaler’s robust financial results and strategic projections.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.