While Wall Street analysts may not always make perfect predictions, paying attention to a strong consensus on a particular stock can be worthwhile. The Wall Street Journal monitors 49 analysts who evaluate cybersecurity leader Zscaler ( ZS 2.14%), and most of them have given it a buy rating, with not a single analyst suggesting it should be sold.
This Wednesday, Zscaler published exceptional quarterly results to conclude its fiscal year 2025, which ended on July 31, leading its stock price to surge up to 6% during after-hours trading. Despite this, shares remain 25% below their all-time peak in 2021, a period marked by an overheated tech market and unsustainable valuations. Nevertheless, Wall Street anticipates that the rebound will progress further.
Here’s why analysts’ optimism about Zscaler may be well-founded.
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A frontrunner in zero-trust cybersecurity
Organizations are increasingly shifting their workflows online via technologies like cloud computing, broadening their customer base and enabling them to hire talent globally. Yet, this digital transformation introduces new vulnerabilities that cybercriminals can exploit at any moment, from anywhere in the world.
Zscaler’s Zero Trust Exchange is designed to address these vulnerabilities. It starts with identity verification, treating every login attempt as potentially suspicious to minimize unauthorized access. The system checks each user’s credentials, their device, and their location to determine if the login attempt is legitimate or the result of compromised credentials. This approach is particularly useful in the era of remote work, when many team members aren’t working onsite.
To further enhance protection, the Zero Trust Exchange only allows employees to access the digital tools essential for their roles. As a result, even if an attacker manages to breach the system, they can’t freely move through the network or reach other sensitive resources. Zscaler’s vision extends beyond this, aiming to create a “Zero Trust Everywhere” environment in which the entire organization is protected by zero-trust principles.
To move closer to this goal, Zscaler introduced a new feature last year—Zero Trust Branch—which brings all warehouses, retail outlets, and devices under the Zero Trust Exchange to isolate each asset from a cybersecurity perspective. This means if one asset is compromised, it doesn’t threaten the rest of the company.
Zscaler aimed to have 390 organizations adopt the Zero Trust Everywhere model by the close of fiscal 2026. By the end of fiscal 2025, over 350 had already signed on, putting the company well ahead of schedule. Considering Zscaler serves more than 9,400 clients overall, there remains a huge untapped market for this advanced cybersecurity approach.
Zscaler’s fiscal 2025 revenue surpassed expectations
During fiscal 2025, Zscaler posted $2.67 billion in revenue, marking a 23% increase from the previous year. This figure exceeded the latest management forecast of $2.66 billion, which itself had been revised upward three times during the year.
Zscaler’s revenue could have climbed even higher in fiscal 2025, but the company chose to focus on profitability by carefully controlling expenses. While it reported a GAAP net loss of $41.4 million for the year, this was a 28% improvement compared to the prior year’s loss.
Excluding one-time and non-cash costs such as stock-based compensation, Zscaler actually achieved an adjusted profit of $535.8 million in fiscal 2025, which was a 29% increase over the previous year. The company prefers this non-GAAP measure, as it often provides a clearer picture of true financial performance.
Wall Street maintains a positive outlook on Zscaler
The Wall Street Journal tracks 49 analysts following Zscaler, with 30 rating it a buy. Another six are in the overweight (positive) camp, and 13 recommend holding. Not a single analyst has issued a sell rating.
The consensus price target stands at $318.26, implying a possible 13% gain over the next 12 to 18 months. The highest target among analysts is $385, indicating a potential 37% rise, which would bring Zscaler’s stock close to its 2021 peak of around $393.
Zscaler’s price-to-sales (P/S) ratio soared above 60 in 2021, far above sustainable levels. Since then, substantial revenue growth and a 25% drop in share price have brought the P/S ratio down to 16.5. This positions Zscaler between two key competitors, Palo Alto Networks and CrowdStrike:
CRWD PS Ratio data by YCharts
From my perspective, this suggests Zscaler shares are reasonably priced—not a bargain, but not overpriced either. Paying a fair value can still be wise if long-term growth prospects are strong, which seems likely in this case. Zscaler estimates its total addressable market at $96 billion, meaning the company’s current revenue represents just a fraction of its full potential.
As a result, Wall Street’s current price targets may actually be on the conservative side for the long term, making now an appealing time to consider Zscaler stock.
