TLDR
- KeyBanc raised its Zscaler price target from $185 to $210, keeping an Overweight rating
- Channel checks were steady quarter over quarter, though qualitative feedback remains mixed
- KeyBanc flagged some deterioration in go-to-market alignment between Zscaler and CrowdStrike sellers
- Zscaler trades at a discounted valuation of 6.6x revenues versus peers at 10.7x revenues
- An analyst day in October could serve as a catalyst for improved messaging
Zscaler (ZS) climbed 2.11% on Friday after KeyBanc Capital Markets raised its price target on the stock to $210 from $185, while keeping its Overweight rating intact. The stock was trading at $178.65 at the time of writing.
Analyst Eric Heath said channel checks on Zscaler were “about steady” quarter over quarter. However, he noted that qualitative feedback on the company remains mixed, particularly around its role as a platform vendor and the competitive landscape.
One area of concern raised by Heath was a deterioration in go-to-market alignment between Zscaler and CrowdStrike sellers in the field. He noted that partners are unclear on the exact cause of this friction.
Despite those concerns, KeyBanc said it remains constructive on Zscaler. The firm pointed to an improved security spend environment and the company’s leadership position in SASE as key reasons for its positive outlook.
KeyBanc also highlighted that segmentation has become a big focus for customers following the release of Claude Mythos. The firm believes Zscaler could be uniquely positioned here with its cloud security solution.
Valuation was another factor in KeyBanc’s bullish stance. Zscaler trades at 6.6 times revenues compared to 10.7 times revenues for peers with more than 10% cyber growth, suggesting room for multiple expansion.
Fundamentals Still Strong
Zscaler’s underlying business metrics support the constructive view. The company carries a gross profit margin of 77% and has posted revenue growth of 25%.
InvestingPro analysis has flagged the stock as undervalued at current levels, placing it on its most undervalued stocks list. Forty-one analysts have also revised their earnings estimates upward for the upcoming period.
Fiscal year 2027 guidance has already been soft-guided, which KeyBanc sees as a further reason for confidence heading into the next reporting cycle.
Analyst Day in October
KeyBanc pointed to Zscaler’s upcoming analyst day in October as a potential catalyst. The firm sees an opportunity for the company to sharpen its messaging to investors at that event.
Heath also raised price targets on several other cybersecurity names alongside Zscaler, including CrowdStrike (CRWD), Netskope (NTSK), Okta (OKTA), and Rubrik (RBRK), reflecting a broadly positive view on security spending.
Other firms have also recently updated their views on Zscaler. Stifel raised its price target to $200 from $175 and kept a Buy rating, expecting at least in-line results for Zscaler’s fourth-quarter fiscal 2026 earnings.
TD Cowen increased its target to $200 from $180 with a Buy rating, also anticipating in-line or better results in the upcoming report.
Cantor Fitzgerald reiterated its Overweight rating with a price target of $225, despite flagging slightly weaker channel check results for Q4 fiscal 2026 compared to the prior quarter.
Options activity around Zscaler has also picked up. A total of 39,437 contracts were traded recently, with call options making up the bulk at 34,601 contracts versus 4,836 put options.
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