Key Takeaways
- Zscaler shares rose 3% today after Freedom Broker raised its price target to $270 from $230 and kept a Buy rating.
- AI found two critical flaws in PHP, and that sent security stocks higher. It also makes a strong case that security spending keeps rising for years.
- Analysts already expect Zscaler’s revenue to grow from $3.35 billion in fiscal 2026 to $5.33 billion by fiscal 2029.
- For the $270 target to look reasonable, the next report, due next month, needs to show growth ahead of management’s guidance.
Zscaler (ZS) rose 3% today, its second day of gains even as the Nasdaq-100 sold off.
This morning, Freedom Broker analyst Almas Almaganbetov raised his price target on Zscaler to $270 from $230 and kept a Buy rating. DA Davidson, which initiated coverage on Wednesday, is far less upbeat: Neutral, with a $215 target.
But the bigger story is cybersecurity as a whole.
AI is finding the bugs now
On Tuesday, two critical flaws were disclosed in PHP, the language behind about 70% of the world’s websites. Researchers at Calif, working with OpenAI, and at Wiz used AI to find them. Wiz says every PHP version released in the last decade is exposed to at least one.
As websites rushed to patch, security stocks rallied, Zscaler by 8% on Wednesday.
Haseeb Qureshi, managing partner at crypto venture firm Dragonfly, put it bluntly on X: “What’s happening in cybersecurity is a COVID-like wave ripping through the Internet.”
That’s the pitch Zscaler made at its Oct. 6 investor day, where CEO Jay Chaudhry said, “The agentic AI era is quickly becoming the most significant opportunity in our company’s history.”
TIKR tracks 47 analysts on Zscaler. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Zscaler, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Zscaler’s Analyst Ratings
The growth is already in the estimates
If AI keeps turning up flaws this big, security spending looks like a lasting trend. But analysts already expect plenty of growth from Zscaler…
Consensus has revenue climbing from $3.35 billion in fiscal 2026 to $5.33 billion by fiscal 2029. The fiscal 2027 estimate of $3.93 billion sits near the top of management’s guidance from its Sept. 3 earnings call, which calls for 16.6% to 17.5% growth.
So for the PHP scare to move the stock from here, it has to push spending above what’s modeled.
Plenty is priced in
After an 85% rebound since April, the multiple has climbed too…
Zscaler traded at 47x forward earnings at Wednesday’s close, up from a five-year low of 28x in late June. After today’s gain it’s closer to 49x. That’s a premium for growth that’s set to slow from fiscal 2026’s 25%. To reach Freedom Broker’s $270, the stock needs either a richer multiple or higher estimates.
My take: AI-found bugs look like a lasting tailwind for security budgets, and Zscaler is well placed to catch it. At this price, though, I’d want to see it in the numbers first.
Next month’s report is the test: growth running ahead of that guidance would make $270 look a lot more reasonable.
So what is Zscaler stock actually worth?
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Disclaimer:
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