Key Takeaways
- KeyBanc Capital Markets increased Zscaler’s price objective from $185 to $210 while maintaining an Overweight recommendation
- Quarterly channel feedback showed stability, although qualitative commentary continues to be varied
- Some friction has emerged in field-level coordination between Zscaler and CrowdStrike sales teams
- The company’s valuation multiple of 6.6x revenue represents a substantial discount compared to peer average of 10.7x
- October’s scheduled analyst day could provide momentum through enhanced investor communication
Shares of Zscaler (ZS) advanced 2.11% during Friday’s trading session following KeyBanc Capital Markets’ decision to lift its price objective on the cybersecurity firm to $210 from the previous $185 target, while reaffirming its Overweight recommendation. The equity was changing hands at $178.65 during the session.
KeyBanc’s Eric Heath reported that channel feedback regarding Zscaler demonstrated sequential stability from the previous quarter. Nevertheless, Heath observed that qualitative commentary surrounding the organization remains inconsistent, especially concerning its platform vendor positioning and competitive dynamics.
Heath identified a particular challenge: weakening coordination in go-to-market strategies between Zscaler and CrowdStrike field sales organizations. According to his research, channel partners remain uncertain about the root causes driving this misalignment.
Notwithstanding these challenges, KeyBanc maintained its optimistic perspective on Zscaler. The investment firm emphasized an enhancing security expenditure environment and Zscaler’s commanding position within the SASE market as primary drivers for its favorable assessment.
KeyBanc additionally noted that network segmentation has emerged as a critical customer priority following Claude Mythos’s introduction. The firm believes Zscaler’s cloud-native security architecture could provide distinct advantages in addressing this trend.
The valuation argument strengthened KeyBanc’s bullish thesis. Trading at 6.6 times revenue multiples versus 10.7 times for comparable high-growth cybersecurity companies, Zscaler appears to offer significant multiple expansion potential.
Core Business Metrics Remain Robust
The company’s fundamental performance indicators validate the optimistic perspective. Zscaler maintains an impressive gross profit margin of 77% while delivering revenue expansion of 25%.
According to InvestingPro’s analytical framework, the stock appears undervalued at present price levels, earning inclusion on the platform’s undervalued stocks roster. Additionally, 41 Wall Street analysts have recently elevated their earnings projections for the approaching period.
Management has already provided preliminary guidance for fiscal year 2027, which KeyBanc interprets as an additional confidence factor approaching the next earnings announcement.
October Investor Event on the Horizon
KeyBanc identified Zscaler’s scheduled October analyst day as a potentially significant catalyst. The firm anticipates the company could utilize this platform to refine its investment narrative and strategic messaging.
Heath concurrently elevated price objectives on multiple cybersecurity peers alongside Zscaler, including CrowdStrike (CRWD), Netskope (NTSK), Okta (OKTA), and Rubrik (RBRK), signaling broad-based optimism regarding enterprise security investment trends.
Additional Wall Street firms have recently adjusted their perspectives on Zscaler. Stifel elevated its price target to $200 from $175 while maintaining a Buy rating, projecting results that meet or exceed consensus for the company’s fourth-quarter fiscal 2026 performance.
TD Cowen lifted its objective to $200 from $180 with a Buy rating, similarly forecasting results aligned with or superior to expectations in the forthcoming report.
Cantor Fitzgerald reaffirmed its Overweight stance with a $225 price target, though acknowledging modestly softer channel data for Q4 fiscal 2026 relative to the preceding quarter.
Derivatives trading surrounding Zscaler has experienced increased activity. Recent volume reached 39,437 contracts, with call options comprising the majority at 34,601 contracts compared with 4,836 put options.
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