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Investing.com - UBS lowered its price target on Zscaler (NASDAQ:ZS) to $340 from $350 while maintaining a Buy rating on Wednesday. This target remains significantly above the current stock price of $257.01 and aligns with the broader analyst consensus, which remains bullish with an average recommendation of 1.61 (Buy).
The cybersecurity firm’s first-quarter results showed organic net new annual recurring revenue (NNARR) growth accelerating to what UBS estimates was over 20%, exceeding internal expectations despite the lack of direct organic ARR disclosure. This performance is consistent with Zscaler’s impressive 23.31% year-over-year revenue growth.
UBS noted that this strong NNARR performance contributed to the majority of Zscaler’s $22 million increase to its full-year ARR guidance, with its Red Canary acquisition also outperforming expectations.
The outlook for the remainder of the year suggests approximately 10% organic NNARR growth, reflecting continued business momentum for the cybersecurity provider.
UBS maintains that Zscaler shares remain attractive at 11 times enterprise value to sales (EV/S) for a company delivering 22% year-over-year growth.
In other recent news, Zscaler reported its first-quarter fiscal 2026 results, showing a 26% year-over-year growth in annual recurring revenue (ARR) to $3,204 million, surpassing consensus estimates by $22 million. The company also exceeded FactSet consensus estimates in revenue, billings, earnings per share, and free cash flow, prompting Zscaler to raise its full-year fiscal 2026 guidance across all financial metrics. However, several analyst firms have adjusted their price targets for Zscaler. Needham lowered its target to $310 while maintaining a Buy rating, citing ARR concerns. Similarly, Mizuho reduced its price target to $310, maintaining a Neutral rating due to acquisition clarity concerns. Scotiabank also lowered its target to $320, describing the company’s bottom-line results as slightly underwhelming despite decent ARR performance. Stifel adjusted its price target to $320, maintaining a Buy rating, although the reason for the change was not explicitly connected to Zscaler’s performance. Meanwhile, Cantor Fitzgerald reiterated its Overweight rating with a $365 price target, reflecting confidence in the company’s financial outlook.
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