On Monday, TD Cowen analysts, led by Shaul Eyal, reaffirmed their confidence in Zscaler (NASDAQ:ZS), maintaining a Buy rating and a $270.00 price target on the company’s shares. Following a meeting with Zscaler’s Vice President of Investor Relations and Strategic Finance, Ashwin Kesireddy, on March 14, Eyal highlighted the company’s strong second-quarter performance and its positive growth outlook. According to InvestingPro data, the stock is currently trading near its Fair Value, with 33 analysts recently revising their earnings expectations upward.
Zscaler reported a 23% increase in revenue, a 22% free cash flow (FCF) margin, and a 23% growth in Annual Recurring Revenue (ARR) for the second quarter. These figures underscore the success of Zscaler’s strategic investments and indicate a robust demand for its services. The company’s impressive 77.86% gross profit margin and strong 27.77% year-over-year revenue growth reflect its operational efficiency. The company’s guidance of reaching $3 billion in ARR by the fiscal year 2025 signals strong confidence in its demand trends and execution capabilities.
The cybersecurity firm ended the second quarter with 130 enterprises adopting its Zero Trust Everywhere platform. Zscaler anticipates tripling this number by the fiscal year 2026, which ends in July 2026. The company is well-positioned to capitalize on the current cycle of technology refreshment, as organizations look to replace legacy systems such as firewalls, VPNs, and SD-WAN devices, aiming to enhance security and reduce costs. For deeper insights into Zscaler’s growth potential and financial health (currently rated as GOOD by InvestingPro), subscribers can access the comprehensive Pro Research Report, along with additional ProTips and metrics.
Zscaler is expected to provide further updates on its technological advancements during its upcoming Zenith Live event, scheduled to take place from June 2 to June 5, 2025, in Las Vegas. The firm’s commitment to innovation and its strategic position in the market forms the basis for TD Cowen’s reiterated Buy rating and price target, which is approximately 13 times the firm’s estimated FY26 enterprise value/revenue. With a market capitalization of $31 billion and analyst consensus remaining bullish, the company maintains its strong position in the cybersecurity sector.
In other recent news, Zscaler has reported strong financial results for the second quarter of fiscal year 2025, surpassing consensus estimates for revenue, billings, earnings per share, and free cash flow. This performance has led to an upward revision of the company’s full-year 2025 guidance, projecting higher revenue, billings, operating profit, EPS, and free cash flow. UBS analyst Roger Boyd increased Zscaler’s stock price target to $260, citing strong billings performance and potential growth in the US Federal market. Similarly, TD Cowen maintained a Buy rating with a $270 target, highlighting Zscaler’s balanced growth and profitability, driven by its use of AI and Zero Trust solutions.
RBC Capital Markets also lifted its price target for Zscaler to $250, noting improvements in sales strategies and a stable forecast for the second half of the fiscal year. Stifel reiterated its Buy rating with a $235 target, emphasizing Zscaler’s expanding zero trust security portfolio and effective go-to-market strategies. Cantor Fitzgerald raised its price target to $220 while maintaining a Neutral rating, acknowledging Zscaler’s strong financial performance and potential for accelerated billings. These developments reflect a positive outlook from multiple analysts, underscoring Zscaler’s strong position in the cybersecurity market and its growth potential.
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