Zscaler Stock Target Raised (NASDAQ:ZS) Ahead of Upcoming Earnings

Zscaler's stock (NASDAQ: ZS) has been given an upgraded price target this morning, with the analyst expecting ~10% upside from the latest close ($272.52) as anticipation builds for the company's earnings report next week (September 2).

Barclays has increased its price target on ZS to $300 from $290, reiterating an Overweight rating, projecting that Zscaler's fiscal 2026 annual recurring revenue (ARR) could grow between 19% and 20%, with the high end of this range reflecting bullish sentiment.

This revised outlook reflects confidence in Zscaler's growth trajectory, bolstered by a more experienced sales team, an expanded platform strategy, and a measured approach to integrating the recently acquired Red Canary.

This adjustment by Barclays echoes earlier positive revisions from other financial institutions.

Cantor Fitzgerald increased its price target to $340 from $290 on June 17, buoyed by positive feedback from Zscaler's annual customer and partner cloud conference, emphasizing the company's focused execution and broadening platform capabilities.

Similarly, Bank of America raised its price target to $340 from $285 on June 18, citing sustained customer demand and increasing platform adoption as key drivers for the higher valuation.

Earnings – The Latest Print, and Upcoming Expectations

Zscaler's fiscal Q1 earnings, released on May 29, revealed strong financial performance. Revenue reached $678 million, a 23% year-over-year increase, while annual recurring revenue (ARR) stood at approximately $2.9 billion, also reflecting a 23% year-over-year growth. Calculated billings increased by 25% year over year to $785 million. The company reported a gross margin of 80.3% and an operating margin of approximately 22%, consistent with the previous year. Free cash flow margin was 18%, with data center capital expenditures at 11% of revenue.

Looking ahead, Zscaler has provided guidance for Q4 revenue between $705 million and $707 million, indicating approximately 19% year-over-year growth. For the full fiscal year 2025, the company projects revenue between $2.659 billion and $2.661 billion, representing approximately 23% year-over-year growth.

The street is expecting revenue to come in at $707.15million on the quarter, for a 19.28% growth rate, reflecting an EPS of $0.80. This would reflect a mild narrowing on earnings per share from the $0.88 delivered in the same period Y/Y, and the $0.84 reported in Q1

Zscaler does have a history of beating the street, with each of the past four earnings reports beating EPS estimates by 10%+.