Street Calls of the Week
Investing.com - Piper Sandler has raised its price target on Zscaler (NASDAQ:ZS) to $280.00 from $260.00 while maintaining a Neutral rating following the company’s fourth-quarter fiscal results. The cybersecurity firm, currently valued at $43.14 billion, has seen its stock surge over 45% in the past six months according to InvestingPro data.
The cybersecurity firm delivered a strong end to its fiscal year with billings outperforming expectations and annual recurring revenue (ARR) exceeding $3 billion based on what Piper Sandler described as "a more conservative definition."
Zscaler also achieved record operating margins in the quarter, demonstrating improved profitability alongside its revenue growth.
The research firm noted that Zscaler’s organic guidance for fiscal year 2026 came in "slightly light of expectations" with a 19% organic growth outlook, though Piper Sandler sees potential upside to this forecast.
Despite the positive performance, Piper Sandler maintained its Neutral stance, citing Zscaler’s current valuation at approximately 12 times calendar year 2026 estimated revenue and over 40 times free cash flow as factors that already reflect the potential for outperformance.
In other recent news, Zscaler reported a strong fiscal fourth quarter, with billings exceeding expectations by $57 million, a 5% increase. The company’s annual recurring revenue (ARR) growth remained steady at 22% compared to the previous quarter. KeyBanc responded by raising its price target for Zscaler to $350, maintaining an Overweight rating. Bernstein reiterated its Outperform rating with a $251 price target, highlighting Zscaler’s strong operational and financial controls. Scotiabank adjusted its price target to $334 from $360, describing the results as a "clean beat" across both top and bottom line metrics. Rosenblatt increased its price target to $330, citing Zscaler’s performance that exceeded growth and profitability expectations. JPMorgan also raised its price target to $351, noting better-than-expected revenue, billings, profitability, and free cash flow. Despite some initial concerns over ARR guidance, JPMorgan attributed this to a change in methodology.
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