Zscaler Inc. (ZS) shares surged 5.03% in intraday trading, driven by positive analyst reports and robust third-quarter results. The cybersecurity company's stock climbed on the back of improved sales execution and growing confidence in its platform strategy.
UBS analysts highlighted Zscaler's strong performance in Q3, noting an "unscheduled" billings growth of 28%, up from 20% and 25% in Q1 and Q2, respectively. The company's platform story is "hitting its stride," with nearly $1 billion in annual recurring revenue linked to its zero trust, data security, and artificial intelligence offerings. In response to these developments, UBS reiterated its buy rating and raised its price target to $315 from $260.
Adding to the positive sentiment, Canaccord analyst Kingsley Crane increased the firm's price target on Zscaler to $305 from $230, maintaining a Buy rating. The upcoming acquisition of Red Canary, expected to close in August, is set to enhance Zscaler's threat detection capabilities with AI and bring in talent in the security operations space. Despite a slight deceleration in revenue growth guidance for Q4, analysts remain optimistic about Zscaler's long-term prospects, particularly its ability to achieve over 20% revenue growth in fiscal 2026.
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