TLDR
- On March 3, 2026, Wells Fargo launched coverage of Zscaler (ZS) with an Overweight rating and set a $200 price target.
- Analysts view Red Canary-related concerns as temporary noise, presenting an attractive buying opportunity.
- The firm projects sustained 20% growth powered by Zero Trust Exchange, data protection, and artificial intelligence initiatives.
- The company serves 45% of Fortune 500 companies and 40% of Global 2000 enterprises.
- While recent analyst price target reductions have occurred, all firms maintain constructive outlooks.
On March 3, 2026, Wells Fargo began covering Zscaler (NASDAQ: ZS) with an Overweight rating alongside a $200 price objective.
Shares were changing hands at $148.58 during that session — hovering near the 52-week low of $140.56.
According to Wells Fargo’s research team, the recent Red Canary-related worries have created what they characterize as an attractive entry opportunity for investors.
Analysts labeled Zscaler as a “large category winner expanding into platform,” emphasizing that Red Canary-related noise fails to alter the fundamental investment thesis.
The firm anticipates the company’s established business lines will maintain stability as emerging growth segments accelerate.
These emerging segments encompass Zero Trust Exchange technology, data protection solutions, and artificial intelligence capabilities — all expected to fuel 20% growth rates moving forward.
Zscaler has delivered 24% revenue expansion over the trailing twelve months, while maintaining gross profit margins of 77%.
Strong Enterprise Foothold
Wells Fargo highlighted Zscaler’s substantial presence among major corporations as a primary driver of their bullish stance.
The platform serves 45% of Fortune 500 organizations, 40% of Global 2000 companies, and approximately 20% of businesses employing over 2,000 people.
The investment firm challenged concerns about market saturation, arguing these worries are exaggerated even when analyzing logo count.
Their addressable market assessment indicates new customer acquisitions could generate $300 million to $400 million in annual revenue, assuming approximately 700 new logos annually.
InvestingPro analysis indicates Zscaler trades at attractive valuations currently, with 37 analysts increasing their earnings projections recently.
Recent Earnings Beat Estimates
Zscaler’s Q2 fiscal 2026 financial results surpassed Wall Street expectations on all key metrics.
Revenue expanded 26% compared to the prior year period, while annual recurring revenue climbed 25%.
Non-GAAP earnings per share reached $1.01, exceeding the $0.86 analyst consensus. Total revenue achieved $815.8 million, surpassing the $798.8 million projection.
Notwithstanding the impressive quarterly performance, several Wall Street firms reduced their price objectives following the release.
TD Cowen reduced its price target to $220 from $260, pointing to market contraction dynamics. BMO Capital lowered its objective to $210 from $315 amid concerns regarding growth sustainability.
Stifel decreased its target to $180 from $320 while noting results beat management guidance. RBC Capital adjusted downward to $205 from $250 based on forward guidance considerations.
Citizens modified its target to $290 from $355 on valuation grounds. All five research firms maintained their positive investment ratings.
Wells Fargo’s inaugural $200 price objective falls below several of those adjusted targets — though remains above current trading levels.
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