On May 30, Piper Sandler analysts changed their rating on Zscaler, Inc. (NASDAQ:ZS)’s stock from “Overweight” to “Neutral,” while increasing its price objective to $260 from the prior target of $235, as reported by The Fly. The change in the rating comes despite Zscaler, Inc. (NASDAQ:ZS)’s healthy performance in Q3 2025 and a less challenging outlook for back-half billings.
An employee standing in front of a large data center, looking toward the future of cloud security.
The proliferation of AI in all aspects of business continues to increase the need for the company’s AI security. In Q3 2025, it saw revenues of $678.0 million, reflecting an increase of 23% YoY. Zscaler, Inc.’s healthy performance was aided by TCV bookings of more than $1 billion and remaining performance obligations of ~$5 billion. However, the uncertainty around the US Fed’s policy decisions is one of the key concerns highlighted by the firm.
While the company delivered strong fundamental performance and has also witnessed a corresponding increase in stock price, the firm opines that the present valuation might not provide the most attractive opportunity for investors. As per the firm, better opportunities to purchase Zscaler, Inc.’s stock might arise in the future.
Zscaler, Inc. highlighted that the broader macroeconomic environment is challenging as the economic uncertainty has been prompting customers to be cautious about IT spending.
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