Zscaler stock price target raised to $320 from $290 at Evercore ISI

Investing.com - Evercore ISI raised its price target on Zscaler (NASDAQ:ZS) to $320 from $290 on Wednesday, maintaining an Outperform rating following the company’s strong fiscal fourth-quarter results. The cybersecurity firm, currently trading at $274.57 with a market cap of $43.14 billion, has seen its stock surge over 52% year-to-date. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.

The cybersecurity firm delivered quarterly results and fiscal year 2026 guidance that exceeded market expectations, with management projecting 22.5% total revenue growth at the midpoint, or 19.5% organically, reflecting approximately $90 million contribution from its Red Canary acquisition. This projection builds on Zscaler’s impressive track record, with InvestingPro data showing current revenue growth of 25.46% and robust gross profit margins of 77.46%.

Zscaler’s annual recurring revenue (ARR) guidance implies $3.687 billion exiting fiscal 2026, representing 22.3% year-over-year growth, with organic ARR growth of 19.1%, including a roughly $95 million contribution from Red Canary.

The company has standardized its ARR reporting methodology, now calculating it using next-twelve-month subscription revenue instead of contract exit run rate, which provides more consistent measurement and better alignment with revenue growth.

Zscaler reported surpassing $250 million in artificial intelligence ARR, excluding Red Canary, and expects to exceed $400 million by the end of fiscal 2026 including the acquisition, while Evercore noted that the company’s new go-to-market strategy under leadership is gaining traction. Analyst consensus remains bullish, with targets ranging from $215 to $385. For deeper insights into Zscaler’s financial health and growth prospects, including 8 additional ProTips, check out the comprehensive research report available on InvestingPro.

In other recent news, Zscaler reported its fourth-quarter earnings, revealing a mixed performance. The company posted billings of $1,202 million, marking a 32.0% year-over-year growth, which exceeded both BTIG and Street estimates. Revenue also showed a positive surprise, reaching $719 million, surpassing the expected $706.95 million. However, Zscaler’s earnings per share (EPS) fell significantly short of forecasts, recording -$0.11 against an expected $0.80. Despite the EPS miss, BTIG maintained its Buy rating on Zscaler, reaffirming a price target of $365.00 due to the strong billing results.

Barclays also reacted positively to Zscaler’s performance by raising its stock price target to $320.00 from $300.00, maintaining an Overweight rating. The investment bank’s decision was influenced by a strong growth in Annual Recurring Revenue (ARR), projecting that Zscaler could achieve nearly $5 billion in ARR by fiscal year 2028. These developments indicate that while Zscaler faced challenges with its EPS, its revenue and billing growth have garnered positive attention from analysts.

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