Zscaler's (ZS) investor day presented multi-year visibility into mid-to-high-teens annual recurring revenue growth, with artificial intelligence-related upside scenario providing further optionality into estimates, Wedbush said in a Wednesday research note.

Wedbush said it came away with positive takeaways from the event with a base case of $8 billion in annual recurring revenue by fiscal 2031 resulting in a compound annual growth rate of 17%, with an upside scenario of $10 billion by fiscal 2031, a 22% CAGR, tied to faster AI adoption.

While Zscaler's management did not state a margin target, its forward five-year

framework implies a 27% to 30% fiscal 2031 operating margin according to Wedbush's calculations, compared with the mid-to-high 20s target that the brokerage was looking for, according to the note.

Wedbush raised its price target to $240 per share from $215 and maintained its outperform rating on the stock.

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