Zscaler price target raised to $310 from $300 at FBN Securities

Investing.com - FBN Securities has raised its price target on Zscaler (NASDAQ:ZS) to $310 from $300 while maintaining an Outperform rating following the company’s strong fiscal fourth-quarter results. The cybersecurity company, currently valued at $42.42 billion, has seen its stock surge over 52% year-to-date. According to InvestingPro analysis, the stock appears overvalued at current levels, though analysts maintain a bullish outlook with targets ranging from $215 to $385.

Zscaler reported 21% year-over-year revenue growth, exceeding consensus estimates by 2%. The company’s annual recurring revenue (ARR) grew by 22% year-over-year, while net new ARR increased by 16%. Billings rose by 32%, and non-GAAP earnings per share reached $0.89, nine cents above consensus. InvestingPro data reveals impressive gross profit margins of 77.46%, with overall revenue growth reaching 25.46% in the last twelve months. Get access to 10+ additional ProTips and comprehensive financial metrics with InvestingPro.

Despite these positive results, FBN Securities notes the stock may face weakness as Zscaler’s fiscal 2026 organic revenue guidance (excluding Red Canary revenue of approximately $90 million) ranges from $3.175 billion to $3.194 billion, representing 17-19% growth, which falls below the consensus estimate of $3.21 billion. The company maintains a "GOOD" financial health score of 2.6 on InvestingPro, with detailed insights available in the comprehensive Pro Research Report, part of the platform’s coverage of 1,400+ US stocks.

The analyst suggests this guidance may be conservative for two reasons: it marks the first annual guidance provided by new CFO Kevin Rubin, and it’s Zscaler’s initial fiscal 2026 forecast. FBN Securities acknowledges that some investors might be concerned about the projected high-single-digit growth in fiscal 2026 organic net new ARR.

In the fiscal fourth quarter, Zscaler’s billings exceeded consensus by 5.5%, outpacing the approximately 3% beats recorded in the previous three quarters, though the firm notes this metric will be downplayed compared to ARR going forward.

In other recent news, Zscaler’s fourth-quarter results have prompted several analysts to adjust their price targets for the company. TD Cowen raised its price target to $330, citing strong performance and no signs of a macroeconomic slowdown. Similarly, RBC Capital increased its target to $335, highlighting the company’s results that exceeded investor expectations. Truist Securities reiterated a Buy rating with a price target of $350, noting significant demand for Zscaler’s platform solutions. BMO Capital also raised its target to $315, mentioning a solid quarter and increased fiscal year 2026 estimates, including the impact of the Red Canary acquisition. Piper Sandler set a new target of $280, emphasizing strong fiscal year-end results and annual recurring revenue surpassing $3 billion. These developments reflect the company’s robust performance and positive outlook from various analyst firms.

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