TD Cowen Reaffirms "Buy" Rating for Zscaler (NASDAQ:ZS)

Key Points

• TD Cowen reaffirmed its “Buy” rating on Zscaler with a $200 price target, implying approximately 15.95% upside. The broader analyst consensus is “Moderate Buy,” with an average target of $217.08.
• Zscaler exceeded quarterly expectations, reporting $898.2 million in revenue, up 24.9% year over year, and $1.19 in adjusted EPS versus the $1.09 consensus estimate. Annual recurring revenue increased 25% to $3.77 billion, supported by stronger enterprise demand and a 24% non-GAAP operating margin.
• Investors face slower expected growth and profitability concerns: fiscal 2027 revenue and ARR growth are projected at roughly 17%, the company remains GAAP unprofitable, free-cash-flow margin declined, and Zscaler plans to cut about 3% of its workforce while reallocating resources toward AI initiatives.

Zscaler (NASDAQ:ZS - Get Free Report)'s stock had its "buy" rating reissued by stock analysts at TD Cowen in a report released on Friday, Benzinga reports. They currently have a $200.00 price target on the stock. TD Cowen's price target suggests a potential upside of 15.95% from the stock's current price.

ZS has been the subject of several other reports. Barclays increased their price target on shares of Zscaler from $192.00 to $200.00 and gave the stock an "overweight" rating in a report on Friday. Cantor Fitzgerald reiterated an "overweight" rating and set a $225.00 target price on shares of Zscaler in a research report on Friday. JPMorgan Chase & Co. increased their target price on Zscaler from $205.00 to $215.00 and gave the stock an "overweight" rating in a research note on Wednesday, August 26th. The Goldman Sachs Group reissued a "neutral" rating and issued a $179.00 price target on shares of Zscaler in a report on Wednesday, May 27th. Finally, Morgan Stanley set a $165.00 target price on shares of Zscaler in a research report on Friday. Thirty-four analysts have rated the stock with a Buy rating, six have given a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $217.08.

Zscaler Stock Performance

NASDAQ:ZS opened at $172.49 on Friday. The company has a debt-to-equity ratio of 0.72, a current ratio of 1.86 and a quick ratio of 1.86. The firm has a market cap of $27.89 billion, a price-to-earnings ratio of -365.98, a price-to-earnings-growth ratio of 101.67 and a beta of 0.95. The firm's fifty day moving average price is $160.51 and its 200 day moving average price is $150.39. Zscaler has a 1-year low of $114.63 and a 1-year high of $336.99.

Zscaler (NASDAQ:ZS - Get Free Report) last announced its quarterly earnings data on Thursday, September 3rd. The company reported $1.19 EPS for the quarter, topping analysts' consensus estimates of $1.09 by $0.10. The company had revenue of $898.18 million during the quarter, compared to the consensus estimate of $876.96 million. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.37%. Zscaler's quarterly revenue was up 24.9% on a year-over-year basis. During the same quarter in the prior year, the firm earned $0.89 EPS. Zscaler has set its FY 2027 guidance at 4.860-4.900 EPS and its Q1 2027 guidance at 1.150-1.160 EPS. On average, sell-side analysts expect that Zscaler will post 0.13 EPS for the current year.

Insiders Place Their Bets

In related news, CEO Jagtar Chaudhry sold 2,878 shares of the firm's stock in a transaction that occurred on Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total value of $363,865.54. Following the sale, the chief executive officer directly owned 343,038 shares of the company's stock, valued at approximately $43,370,294.34. This trade represents a 0.83% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Robert Schlossman sold 3,146 shares of Zscaler stock in a transaction on Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total transaction of $397,748.78. Following the completion of the transaction, the insider owned 69,366 shares in the company, valued at approximately $8,769,943.38. This trade represents a 4.34% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last quarter, insiders sold 16,772 shares of company stock worth $2,139,799. 17.20% of the stock is owned by company insiders.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Amundi grew its position in Zscaler by 12.8% during the second quarter. Amundi now owns 1,137,837 shares of the company's stock valued at $160,606,000 after acquiring an additional 129,563 shares during the period. VIRGINIA RETIREMENT SYSTEMS ET Al purchased a new position in shares of Zscaler in the 2nd quarter worth about $3,588,000. California State Teachers Retirement System lifted its stake in shares of Zscaler by 13,837.9% in the 2nd quarter. California State Teachers Retirement System now owns 19,388,787 shares of the company's stock valued at $2,736,727,000 after purchasing an additional 19,249,679 shares in the last quarter. POM Investment Strategies LLC lifted its stake in shares of Zscaler by 92.9% in the 2nd quarter. POM Investment Strategies LLC now owns 218 shares of the company's stock valued at $31,000 after purchasing an additional 105 shares in the last quarter. Finally, HB Wealth Management LLC grew its holdings in shares of Zscaler by 16.2% during the 2nd quarter. HB Wealth Management LLC now owns 3,182 shares of the company's stock worth $449,000 after purchasing an additional 443 shares during the period. Institutional investors and hedge funds own 46.45% of the company's stock.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Results exceeded expectations. Zscaler reported fiscal Q4 revenue of $898.2 million, up 24.9% year over year and above the $877.0 million consensus estimate. Non-GAAP earnings of $1.19 per share also topped expectations of $1.09. Zscaler Q4 Earnings and Revenues Top Estimates
• Positive Sentiment: Profitability and enterprise demand improved. Q4 non-GAAP operating margin reached a record 24%, while annual recurring revenue rose 25% to $3.77 billion. Large-deal activity increased, Fortune 500 penetration reached 50%, and net retention was 115%, supporting continued customer expansion. Zscaler Announces Strong Fourth Quarter and Fiscal 2026 Financial Results
• Positive Sentiment: Analysts raised targets. Stephens increased its target to $225 and Needham raised its target to $215; Cantor Fitzgerald maintained an overweight rating and a $225 target, while Rosenblatt reiterated buy with a $200 target.
• Neutral Sentiment: AI remains a growth opportunity. Management highlighted momentum for Agentic SecOps and security products designed for AI workloads, but investors are awaiting evidence that these offerings can reaccelerate growth.
• Negative Sentiment: Fiscal 2027 growth is expected to slow. Zscaler forecast revenue growth of 16.6%-17.5% and ARR growth of 16.6%-17.4%, down from 25% in fiscal 2026. This deceleration overshadowed the better-than-expected quarterly results, particularly because full-year revenue guidance was broadly in line with consensus. Zscaler Forecasts Fiscal 2027 Growth
• Negative Sentiment: Restructuring and cash-flow concerns add pressure. The company plans to eliminate about 3% of its workforce as it reallocates resources toward AI and growth initiatives. Q4 free-cash-flow margin fell to 7% from 24% a year earlier because of significantly higher capital spending, while Zscaler remains GAAP unprofitable.
• Negative Sentiment: Some investors question the valuation case. Although ZS trades at a historically lower forward multiple, analysts note that its projected growth lacks the acceleration seen at some AI-focused cybersecurity peers.

Zscaler Company Profile

Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.

Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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