ZS Stock Draws Multiple Target Hikes After Investor Day: Wall Street Sees AI Security Fueling $8B-Plus ARR Path

• Wells Fargo raised its Zscaler target to $260 from $215 and maintained an Overweight rating.
• Barclays highlighted Zscaler’s fiscal 2031 annual recurring revenue target of $8 billion and higher free cash flow margins.
• Citi, TD Cowen and Morgan Stanley also raised their price targets following the event.

Zscaler Inc. (ZS) drew multiple price-target hikes on Wednesday following its Investor Day, as analysts pointed to artificial intelligence (AI) security, platform expansion and improving longer-term cash flow as potential growth drivers.

Wells Fargo made the largest move among the firms, lifting its target to $260 from $215 while maintaining an ‘Overweight’ rating, according to The Fly. The firm said the event delivered a refreshed narrative with measurable growth beyond Zscaler’s core Zero Trust for Users business.

It also highlighted additional opportunities to win new customers, expand existing accounts and strengthen Zscaler’s position in AI security.

Analysts See Broader Growth, Morgan Stanley Stays Cautious

Citi raised its target to $245 from $205, saying the Investor Day provided the “necessary ingredients” to improve sentiment, according to The Fly. TD Cowen moved to $230, citing AI’s role in strengthening Zero Trust for Users while new products expand Zscaler’s addressable market and create additional customer entry points.

Barclays pointed to Zscaler’s updated long-term model, including $8 billion in annual recurring revenue (ARR) in fiscal 2031 and higher free cash flow margins, per TheFly.

Morgan Stanley remained more cautious, keeping an Equal Weight rating while lifting its target to $185 from $165 on modestly higher free cash flow estimates and a higher longer-term valuation multiple.

Analysts Focus On AI Security

BofA raised its price target to $240, saying it came away from the event “more bullish” on Zscaler’s positioning for the AI era, according to The Fly.

 Meanwhile, Stifel pointed to the growing importance of both securing AI systems and using AI to improve cybersecurity. The firm also said Zscaler’s zero-trust architecture is well suited to that shift.

Guggenheim raised its target to $254 and kept a ‘Buy’ rating, citing expectations for higher growth and cash flow in the outer years following the Investor Day.

Source: TheFly | The calculations are based on Zscaler’s Tuesday close of $207.79.

Zscaler Keeps Near-Term Guidance Intact

Zscaler on Tuesday reaffirmed its fiscal 2027 outlook, including ARR of $4.39 billion to $4.42 billion and revenue of $3.90 billion to $3.94 billion. The company expects a free cash flow margin of 23% to 23.5%.

CEO Jay Chaudhry said the company sees multiple growth engines supporting its longer-term goal of reaching $10 billion in ARR, with agentic AI creating new security requirements across users, data, and autonomous software agents.

What Retail Thinks About ZS Stock

Despite the recent exuberance around cybersecurity stocks, retail investors’ sentiment around ZS stock remained ‘bearish’ on Stocktwits. 

So far this year, ZS stock has fallen over 8%, while peers like CRWD and PANW have rallied more than 140% and 126%, respectively. The First Trust NASDAQ Cybersecurity ETF (CIBR), which holds all three stocks, has risen nearly 53% during this period.

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