Zscaler Will Hit $360 Soon: Here's the How and Why

Zscaler (ZS) shares are up over 6% today, driven by favorable analyst sentiment following strong FQ3 2025 results, which revealed revenue exceeding forecasts and growth topping 20%, alongside accelerated gains in billings and deferred revenue. Analysts have significantly revised price targets upward, with MarketBeat reporting a 17% increase in the consensus price target within days of the release. Technical analysis suggests the stock could reach $360 by late 2025 or early 2026, with a potential bull-case scenario pushing it towards $375-$403, despite growth slowing to the low 20% range.

Analysis

Zscaler's (ZS) stock price recently surged over 6% to $293.12, breaking out of a long-term trading range and signaling a potential uptrend. This movement is primarily attributed to its strong fiscal Q3 2025 results, which surpassed analyst expectations with revenue growth exceeding 20%, accelerated gains in billings and deferred revenue, a 21% increase in net income, and an 18% free cash flow margin. Despite growth moderating to the low 20% range, the company's fundamentals are viewed as catching up to its valuation, supporting an outlook for sustainable 20% growth. Analyst sentiment has turned markedly positive post-earnings, with MarketBeat reporting 24 revisions from 36 analysts, leading to a 17% increase in the consensus price target to approximately $277.32, though high-end targets reach $320. Technical analysis suggests a target of $360 by late 2025 or early 2026, with a bull-case scenario potentially pushing prices to the $375-$403 range. Zscaler's financial health is robust, with over $3 billion in cash and equivalents and equity up 41% year-to-date in F2025. Institutional investors hold 41% of the stock and have been net buyers, while a 9% short interest prior to the earnings release suggests a short-covering rally may be contributing to the current price action. The company's guidance for billings aligns with consensus, implying Q3 strength will persist, and new offerings like Z-Flex are anticipated to maintain momentum.

Key Decisions for Investors

• Investors should recognize Zscaler's strong operational performance and positive shift in analyst sentiment, which, combined with bullish technical indicators, suggest continued upward potential despite the stock trading above the recently revised average price target.
• Monitor Zscaler's subsequent quarterly reports for sustained revenue growth above 20%, continued free cash flow generation, and successful adoption of new products like Z-Flex to validate the current optimistic outlook and justify further price appreciation.
• Consider the impact of ongoing institutional buying and potential for further short-covering, which could provide tailwinds for the stock, but also weigh the valuation against the growth trajectory and the existing average analyst price target of $277.32 versus more aggressive technical targets.