Cantor Fitzgerald reiterates Zscaler stock rating on partner feedback By Investing.com

Cantor Fitzgerald reiterated an Overweight rating on Zscaler with a $300 price target, citing partners saying the business is tracking above plan and performing well. Zscaler’s revenue grew 24% over the last 12 months with gross margins of 77%, while the company also recently beat second-quarter fiscal 2026 estimates and raised full-year guidance. Sentiment is mixed overall as some firms cut targets or downgraded the stock on valuation and competitive concerns.

Analysis

The setup is less about near-term earnings and more about whether Zscaler can convert “category winner” status into a durable platform multiple. The market is being asked to underwrite two expansions at once: higher confidence in execution and a larger AI-security wallet share inside the same installed base. That second leg matters because it could extend growth without proportional sales efficiency, which is how a security name re-rates from a good SaaS to a de facto control point.

The competitive risk is not just point-product rivalry; it is bundle pressure. If larger platforms keep improving zero-trust and AI-security features, Zscaler may still win new deals but at lower ACV and slower expansion, which is usually where the multiple compresses first. The more interesting second-order effect is that a credible AI-security offering could actually pull spend forward from adjacent tools, making Zscaler a budget consolidator rather than a pure growth beneficiary.

Near term, the stock is vulnerable to guidance nuance more than headline beats. After a strong print, the bar is now on multi-quarter demand durability and net retention trajectory, so any sign of elongated sales cycles or more cautious security consolidation commentary could hit the multiple even if revenue holds. Conversely, if management can quantify AI attach or platform expansion, the stock likely trades on narrative expansion for 1-2 quarters before fundamentals catch up.

Consensus may be underestimating how much of the bear case is already embedded in valuation compression. The downside is less about a bad quarter and more about a slow-burn reassessment that Zscaler is becoming a must-have layer rather than a budget-absorbent growth engine. That creates a favorable asymmetry for tactical longs into earnings, but only if risk is defined tightly because the competitive overhang can reassert itself quickly on any disappointing forward commentary.

Key Decisions for Investors

• Buy ZS into earnings only as a defined-risk trade: consider 2-4 week call spreads financed by selling upside above consensus-revision targets; goal is to capture a post-print multiple re-rate if guidance/AI attach commentary is strong.
• If already long ZS, hedge with a short-dated put spread into the release; the stock’s main risk is not the quarter itself but a softer forward tone on consolidation and competition, which can mean-revert the name 8-12% in 1-3 sessions.
• Pair trade: long ZS / short a large-platform cybersecurity basket proxy over 1-3 months if you expect standalone zero-trust spend to outperform bundled security suites; this expresses the view that best-of-breed still wins despite bundle pressure.
• Trim or avoid adding after a rally unless management quantifies AI-security monetization; without that proof point, upside is likely capped to a modest multiple expansion rather than a full narrative re-rating.