Needham increased its price target for Zscaler Inc. (NASDAQ:ZS) to US$215, up from US$180, while keeping a "buy" rating. The adjustment follows the cloud‑security firm’s fourth‑quarter fiscal 2026 results, which showed a 25% year‑over‑year rise in annual recurring revenue (ARR) to US$3.771 billion, beating the consensus estimate of US$3.745 billion by US$26 million.
The broker highlighted a 20% organic ARR increase for the quarter and a gross‑profit margin of 76.8%. Net revenue retention held at 115%, and the company reported a 30% ARR uplift from customers adopting its Z‑Flex offering. Needham described the FY2027 ARR guidance—projecting 17% year‑over‑year growth with a net new ARR rise of 4% annually—as conservative, noting a transition in sales leadership and a larger renewal pool in the first half of FY2027.
Other analysts also raised their forecasts. Scotiabank lifted its target to US$200, Morgan Stanley to US$165, Wells Fargo to US$215, Canaccord Genuity set a target of US$210, and BMO Capital moved its target to US$200. The upgrades were driven by accelerated ARR growth, slightly better‑than‑expected Q4 results, higher revenue expectations for FY2027‑28, and strong performance in the Americas and Asia‑Pacific/Japan regions.
Zscaler’s FY2026 total revenue grew 25%, and the firm expects FY2027 organic growth of 14% and FY2028 guidance reflecting continued momentum. The company plans to launch an integrated Agentic SOC solution in the week following the report, which analysts expect to further boost its security portfolio.
Overall, the consensus among the surveyed brokerages points to a more optimistic outlook for Zscaler’s recurring‑revenue model, with multiple firms assigning higher price targets as the firm capitalizes on its expanding ARR base and product innovations.
