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On Wednesday, Mizuho (NYSE:MFG) analysts increased the price target for Zscaler (NASDAQ:ZS) stock to $290 from $275, while maintaining a Neutral rating. The stock, currently trading at $295.03 and near its 52-week high of $298, has delivered an impressive 74.43% return over the past year. The adjustment follows observations from Zscaler’s Zenith Live 2025 user conference in Las Vegas, where the company’s management highlighted its comprehensive cybersecurity architecture and its strategy to consolidate spending onto its platform.
The event included an investor innovations briefing, where Zscaler management emphasized its aggressive pursuit of AI security. With robust gross profit margins of 77.46% and revenue growth of 25.46%, the proposed acquisition of Red Canary is expected to bolster this initiative, as the company aims to strengthen its position within the Secure Access Service Edge (SASE) and Zero Trust markets.
Despite the positive outlook on Zscaler’s fundamentals, the analysts noted caution. They highlighted the challenges posed by the current macroeconomic environment and the increasingly competitive SASE market, which could impact Zscaler’s ability to secure large, transformative deals consistently.
The decision to modestly raise the price target reflects a growing confidence in Zscaler’s strategic direction, although the analysts opted to maintain their Neutral rating given the existing market conditions.
In other recent news, Zscaler reported strong third-quarter financial results, with billings increasing by 25% year-over-year, surpassing the company’s 21% guidance. The company’s free cash flow exceeded expectations by 14%, and its operating margin improved by 44 basis points. Analysts from UBS, Canaccord Genuity, FBN Securities, RBC Capital, and Truist Securities have all raised their price targets for Zscaler, reflecting optimism about the company’s growth prospects and financial performance. UBS raised its target to $315, while Canaccord Genuity and FBN Securities increased their targets to $305 and $300, respectively. RBC Capital lifted its target to $304, and Truist Securities adjusted its target to $300, all maintaining positive ratings on the stock.
Zscaler’s acquisition of Red Canary is expected to close in August, enhancing its security operations capabilities. Additionally, the company’s Annual Recurring Revenue (ARR) reached approximately $2.9 billion, marking a 23% year-over-year growth, indicating a path to exceed $3 billion in ARR in the current quarter. Analysts have highlighted the company’s improved sales execution and strong demand for its offerings, with Zscaler’s platform gaining momentum in emerging growth areas. The company’s strategic initiatives, such as the introduction of a flex/credit program, have been positively received, and the appointment of a new CFO was noted as a positive development. Overall, these recent developments suggest a promising outlook for Zscaler’s continued growth and performance in the competitive cloud security market.
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