ZS: Future Share Performance Will Depend On Cybersecurity Demand And Competitive Dynamics

Zscaler's analyst-driven fair value estimate has increased slightly to $327.98 per share. This reflects ongoing optimism among analysts about continued growth opportunities in cybersecurity and resilient fundamentals, despite sector volatility.

Analyst Commentary

Recent updates from Wall Street highlight a range of perspectives on Zscaler, with several analysts raising their price targets and reaffirming positive ratings, while others urge caution around valuation and near-term headwinds.

• Bullish analysts are increasingly optimistic about Zscaler’s ability to accelerate growth, spurred by strong momentum in the cybersecurity sector and tailwinds from increased enterprise security budgets.
• Several reports note that Zscaler consistently beats expectations, particularly in annual recurring revenue and billings growth. This reinforces confidence in the company's fundamental execution.
• The company’s continued innovation and expansion of its platform, including strategic acquisitions and heightened interest in Zero Trust security, support ongoing market share gains and a larger addressable market.
• Despite broader software sector volatility, Zscaler is viewed as resilient. The company has a favorable setup for fiscal 2026 and a robust go-to-market strategy, which underpins intermediate-term momentum.

• Bearish analysts highlight valuation as an area of concern, suggesting current share prices already reflect much of the forecasted growth and leave less room for upside.
• Some channel checks indicate seasonal slowness and the potential for near-term tactical pullbacks in the shares, especially following periods of outperformance.
• A balanced outlook is supported by incremental, rather than step-change, improvements in guidance. Some view the organic 2026 growth outlook as only modestly above expectations.
• Uncertainty remains about the impact of competitive dynamics within secure access markets, and some suggest waiting for better visibility or a more attractive entry point before adding exposure.

What's in the News

• Zscaler unveiled new Digital Experience (ZDX) innovations that help enterprises detect and resolve performance issues faster. These enhancements provide real-time insights and reduce downtime through unified device, network, and application telemetry. The updates are designed to minimize end user disruptions and extend device lifecycles. (Product-Related Announcements)
• HCLTech and Zscaler expanded their strategic partnership by integrating Zscaler's Zero Trust Exchange with HCLTech's Cybersecurity Fusion Center to deliver AI-powered network transformation and enhanced security services worldwide. The collaboration includes managed threat detection, advanced analytics, and secure network transformation capabilities. (Client Announcements)
• Zscaler is sponsoring the development of the Zero Trust Maturation Model (ZTMM) with the Alliance for Smart Healthcare Excellence. This initiative offers healthcare organizations a structured roadmap to improve cybersecurity maturity and resilience against modern threats, including those arising from AI and digital health technologies. (Client Announcements)
• Zscaler issued guidance for the first quarter and full fiscal year 2026, projecting revenue of $772 million to $774 million for the quarter and $3.265 billion to $3.284 billion for the year. (Corporate Guidance - New/Confirmed)

Valuation Changes

• Fair Value Estimate has risen slightly from $324.66 to $327.98 per share.
• Discount Rate has edged down marginally from 8.51% to 8.51%.
• Revenue Growth projection has increased modestly from 20.49% to 20.55%.
• Net Profit Margin has improved slightly from 2.99% to 3.08%.
• Future Price/Earnings (P/E) Ratio has increased moderately from 498.34x to 503.16x.