TLDR
- Wells Fargo initiated Zscaler (ZS) with an Overweight rating and a $200 price target on March 3, 2026.
- The firm sees the Red Canary concerns as noise, calling it a favorable entry point.
- Wells Fargo expects 20% growth, driven by Zero Trust Exchange, data security, and AI.
- Zscaler has captured 45% of the Fortune 500 and 40% of the Global 2000.
- Several analysts have cut price targets recently, though all maintain positive ratings.
Wells Fargo initiated coverage of Zscaler (NASDAQ: ZS) on March 3, 2026, with an Overweight rating and a price target of $200.
The stock was trading at $148.58 at the time — close to its 52-week low of $140.56.
Wells Fargo’s analyst said recent concerns around Red Canary create what they see as a favorable entry point into the stock.
The firm described Zscaler as a “large category winner expanding into platform,” and said the noise around Red Canary doesn’t change the underlying story.
Wells Fargo expects the company’s core business to remain stable while momentum builds in newer growth areas.
Those areas include Zero Trust Exchange, data security, and artificial intelligence — all of which the firm believes can sustain 20% growth going forward.
Zscaler has posted 24% revenue growth over the last twelve months, with gross profit margins sitting at 77%.
Strong Enterprise Foothold
The firm pointed to Zscaler’s deep penetration in large enterprises as a key reason for confidence.
The company has captured 45% of the Fortune 500, 40% of the Global 2000, and around 20% of enterprises with more than 2,000 employees.
Wells Fargo pushed back on fears of market saturation. The firm said those concerns are overstated, even on a logo basis.
Its total addressable market analysis suggests new customer logos can still contribute $300 million to $400 million annually, based on roughly 700 new logos per year.
InvestingPro noted that Zscaler appears undervalued at current levels, with 37 analysts recently revising earnings estimates upward.
Recent Earnings Beat Estimates
Zscaler reported Q2 fiscal 2026 results that beat expectations across the board.
Revenue grew 26% year-over-year, and annual recurring revenue rose 25%.
Non-GAAP EPS came in at $1.01, ahead of the $0.86 consensus. Revenue hit $815.8 million, topping the $798.8 million estimate.
Despite the strong print, multiple firms trimmed their price targets after the results.
TD Cowen cut its target to $220 from $260, citing market contraction. BMO Capital dropped to $210 from $315 on concerns about growth durability.
Stifel lowered its target to $180 from $320 but acknowledged results exceeded guidance. RBC Capital moved to $205 from $250 over guidance concerns.
Citizens adjusted to $290 from $355 on valuation. All five firms kept their positive ratings in place.
Wells Fargo’s $200 target, set at initiation, sits below several of those revised figures — but above where the stock currently trades.
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