See our latest analysis for Zscaler.
Zscaler’s momentum has picked up noticeably, with its share price up over 10% in the past month and a strong total shareholder return of 59% over the past year. This run comes after a string of positive sessions, which suggests that sentiment around its growth prospects is building rather than fading.
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With Zscaler reaching new highs and strong returns over the past year, the key question is whether its stellar growth justifies the current price or if the market is already factoring in years of future expansion. Could there still be value left for investors?
Most Popular Narrative: 3.6% Undervalued
Compared to Zscaler's last close price of $313.04, the most widely followed narrative sees a fair value of $324.66, putting the current share price slightly below the estimated target. Interest in the stock is building as expectations for future growth and profitability drive this valuation perspective.
Explosive growth in AI/ML traffic and emerging threats is creating new security challenges that Zscaler is rapidly addressing with differentiated AI security and agentic operations products. This is positioning the company to capture a rising share of incremental cyber budgets and expand recurring ARR over the long term.
What is the secret behind Zscaler's eye-catching target? It all comes down to bold assumptions about future margins and unexpected growth rates in areas that matter most. Want the real numbers behind these outsized expectations? The full narrative dives deep where the headlines only hint. Click through and find out what could surprise you.
Result: Fair Value of $324.66 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, integrating security from major cloud providers or facing fierce competition from established cybersecurity firms could dampen Zscaler's projected growth and challenge optimism.
Find out about the key risks to this Zscaler narrative.
Another View: Is the Price Too High?
Looking through another lens, Zscaler's price-to-sales ratio stands at 18.5x, far above both the US Software industry average of 5.1x and its own peer group average of 19.1x. More importantly, this ratio is even higher than the fair ratio of 13x that the market could eventually gravitate toward. Such a premium suggests investors are betting heavily on rapid future growth, but it could also spell risk if expectations slip. Does the market’s optimism set the stage for future disappointment, or will Zscaler’s expansion surprise on the upside?
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own Zscaler Narrative
If these views do not match your own or you would rather chart your own path, you can dive into the numbers and build a narrative in under three minutes. Do it your way.
A great starting point for your Zscaler research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Valuation is complex, but we're here to simplify it.
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