Scotiabank raises Zscaler stock price target to $360

Scotiabank raised its price target on Zscaler (ZS) to $360 from $310, maintaining a Sector Outperform rating, following positive customer feedback at the Zenith Live 2025 event. The company, a leader in SASE, is seeing upward earnings revisions from 35 analysts, driven by its ZPA and SDWAN offerings and a 77.5% gross profit margin. Despite positive momentum and recent price target increases from other firms like Deutsche Bank and Jefferies, Scotiabank expressed caution regarding Zscaler's fiscal year 2026 guidance, suggesting potential risks given the stock's 67% year-to-date surge.

Analysis

Scotiabank has raised its price target for Zscaler (NASDAQ:ZS) to $360 from $310, maintaining a Sector Outperform rating, reflecting positive feedback from customers and partners at the Zenith Live 2025 event. Zscaler, currently trading near its 52-week high after a 67% year-to-date surge, is recognized for its leadership in the Secure Access Service Edge (SASE) market and its ability to outpace competitors. This sentiment is broadly shared, with 35 analysts revising earnings expectations upward, supported by the company's strong gross profit margins of 77.5% and significant expansion opportunities with existing customers through offerings like Zscaler Private Access (ZPA) and Branch Connector SDWAN. Other financial institutions, including Deutsche Bank, Jefferies, RBC Capital, Susquehanna, and Needham, have also recently increased their price targets, citing strong customer enthusiasm, the importance of Zscaler’s SASE and Zero Trust solutions, platform expansion, AI integration, and the strategic acquisition of Red Canary. Despite this widespread optimism and Zscaler's innovative position, Scotiabank expresses caution regarding substantial further stock price appreciation, noting the significant YTD gains and potential for the company's fiscal year 2026 guidance to fall short of Wall Street expectations. The Agentic Security Operations Center (SOC) vision, though promising, is not viewed as an immediate growth catalyst.

Key Decisions for Investors

• Investors should acknowledge the strong positive momentum, robust gross margins, and leadership in the high-growth SASE market, which support a bullish outlook, but remain cognizant of the stock's significant year-to-date appreciation.
• It is prudent to monitor Zscaler's upcoming fiscal fourth-quarter results and particularly its guidance for fiscal year 2026, as any shortfall relative to elevated Wall Street expectations could introduce near-term volatility.
• Consider the long-term strategic value of Zscaler's platform, including its AI-driven capabilities and recent acquisitions, balanced against the current valuation and potential for guidance recalibration when making investment decisions.