Zscaler stock upgraded by Wells Fargo on growth outlook

Wells Fargo (NYSE:WFC) upgraded Zscaler (NASDAQ:ZS) stock rating from Equal Weight to Overweight on Friday, while significantly raising its price target to $385.00 from $260.00. The stock, currently trading near its 52-week high at $301.43, has delivered impressive returns with a 67% gain year-to-date according to InvestingPro data.

The upgrade reflects Wells Fargo’s confidence that improvements in Zscaler’s new and upsell business in fiscal year 2025 will establish a foundation for over 20% total billings growth in fiscal year 2026.

Wells Fargo projects Zscaler can achieve $5 billion in annual recurring revenue by fiscal year 2027 through a combination of mid-teens growth (16%) in core products alongside stronger growth (44%) in emerging products.

The research firm also expects Zscaler to continue expanding both operating and free cash flow margins as revenue growth accelerates.

Zscaler, a cloud security company, has been expanding its product portfolio beyond its core zero trust offerings to capture additional market share in the cybersecurity sector.

In other recent news, Zscaler has been the focus of several analyst updates following its Zenith Live 2025 event. Truist Securities raised its price target for Zscaler to $350, maintaining a Buy rating, while Scotiabank (TSX:BNS) increased its target to $360, keeping a Sector Outperform rating. Deutsche Bank (ETR:DBKGn) also raised its target to $350, citing customer enthusiasm for Zscaler’s zero trust platform. Cantor Fitzgerald lifted its price target to $340, highlighting anticipated accelerated billings driven by cloud security and AI analytics adoption. Citizens JMP reaffirmed a Market Outperform rating with a $310 price target after attending the company’s recent conference. Analysts from these firms express confidence in Zscaler’s strategic direction and growth prospects, noting its strong market position in the cybersecurity sector. The company’s focus on digital transformation and vendor consolidation trends is seen as contributing to sustained demand for its services. Zscaler’s recent efforts and customer feedback suggest it is well-positioned to address challenges such as hardware firewall updates and security operations modernization.

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