Key Takeaways
- KeyBanc upgraded Zscaler’s price target from $185 to $210 while maintaining an Overweight rating
- Channel feedback showed stability on a sequential basis, though qualitative sentiment remains varied
- Analysts noted some challenges in go-to-market coordination between Zscaler and CrowdStrike sales teams
- The stock trades at a meaningful discountā6.6x revenue compared to the peer average of 10.7x revenue
- October’s analyst day event may provide a catalyst for enhanced investor communication
Shares of Zscaler (ZS) advanced 2.11% Friday following KeyBanc Capital Markets’ decision to increase its price target to $210 from the previous $185, maintaining an Overweight recommendation. The cybersecurity stock was changing hands at $178.65 during the session.
According to analyst Eric Heath, channel checks revealed conditions that were “about steady” when compared sequentially. Still, Heath observed that qualitative sentiment surrounding the company continues to show variability, especially regarding its positioning as a comprehensive platform provider and competitive dynamics.
Heath identified one concern: weakening coordination in go-to-market strategies between Zscaler and CrowdStrike sales representatives. Channel partners expressed uncertainty about what’s driving this tension.
Nevertheless, KeyBanc maintained an optimistic view on Zscaler. The investment firm cited an improving security spending backdrop and Zscaler’s dominant position in the SASE market as primary drivers of confidence.
KeyBanc also emphasized that network segmentation has emerged as a priority concern for enterprises in the wake of Claude Mythos’s introduction. The firm suggests Zscaler’s cloud-based security platform may offer distinct advantages in addressing this need.
Valuation metrics further supported KeyBanc’s bullish perspective. At 6.6 times revenue, Zscaler trades considerably below the 10.7 times revenue multiple commanded by high-growth cybersecurity peers experiencing double-digit expansion, indicating potential for valuation re-rating.
Solid Business Metrics Underpin Optimism
Zscaler’s core operational performance reinforces the positive outlook. The company maintains an impressive 77% gross profit margin while delivering 25% revenue growth.
According to InvestingPro analysis, the stock appears undervalued at present levels and has been included on its list of most undervalued equities. Additionally, 41 analysts have recently increased their earnings projections for the coming period.
Management has already provided preliminary guidance for fiscal year 2027, which KeyBanc interprets as a positive signal heading into subsequent earnings announcements.
October Analyst Event on the Horizon
KeyBanc highlighted Zscaler’s scheduled analyst day in October as a possible positive catalyst. The firm believes this event presents an opportunity for management to refine its investor narrative.
Heath simultaneously increased price targets on multiple cybersecurity companies beyond Zscaler, including CrowdStrike (CRWD), Netskope (NTSK), Okta (OKTA), and Rubrik (RBRK), signaling broad optimism regarding security expenditure trends.
Additional Wall Street firms have recently modified their Zscaler assessments. Stifel elevated its target to $200 from $175 while maintaining a Buy recommendation, projecting results that meet or exceed expectations for the company’s fourth-quarter fiscal 2026 performance.
TD Cowen lifted its objective to $200 from $180 with a Buy rating, similarly forecasting in-line or superior results in the forthcoming earnings release.
Cantor Fitzgerald reaffirmed its Overweight stance with a $225 price target, though the firm acknowledged somewhat softer channel check findings for Q4 fiscal 2026 relative to the previous quarter.
Options trading volume surrounding Zscaler has intensified recently. A total of 39,437 contracts changed hands, with call options representing the majority at 34,601 contracts compared to 4,836 put options.
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