Zscaler Inc. (ZS) Receives Analyst Lift from Bank of America Amid Rising Cybersecurity Demand
Bank of America (BofA) has revised its target price for Zscaler Inc. (NASDAQ: ZS) upward, citing robust momentum in the cybersecurity and networking sectors. The brokerage’s upgrade follows a broader positive sentiment around cloud‑first security platforms and the increasing urgency for enterprises to secure remote and hybrid work environments.
Analyst Rationale
BofA’s research team highlighted several key factors driving the upside:
| Factor | Impact |
|---|---|
| Escalating Cyber Threat Landscape | Growing sophistication of ransomware and phishing attacks has accelerated demand for cloud‑based threat detection. |
| Enterprise Migration to the Cloud | A projected 30% increase in cloud adoption over the next 3 years creates a larger addressable market for Zscaler’s Zero Trust platform. |
| Strategic Partnerships | Recent collaborations with major cloud providers (e.g., Microsoft Azure, Google Cloud) expand Zscaler’s reach and integration capabilities. |
| Improved Revenue Traction | Zscaler’s latest quarterly results showed a 12% YoY growth, outpacing the broader software sector. |
| Margin Expansion | Operational efficiencies and scale are expected to lift operating margins from roughly 15% to 18% over the next two fiscal years. |
The brokerage’s revised target price reflects a bullish view on Zscaler’s ability to capture a growing share of the global security market.
Company Snapshot
- Sector & Industry: Information Technology / Software
- Primary Exchange: Nasdaq
- Current Share Price: $305.90 (as of 2025‑10‑19)
- 52‑Week Range: $164.78 – $319.89
- Market Capitalization: $47.5 billion
- P/E Ratio: –1120 (negative due to high operating expenses and aggressive growth strategy)
- Founded: 2018 (IPO on March 16, 2018)
- Headquarters: San Jose, United States
Zscaler operates a cloud‑native security platform that delivers web and mobile protection, threat intelligence, cloud application visibility, and networking services to enterprises worldwide. Its “Zero Trust Exchange” architecture allows organizations to secure users, devices, and data regardless of location.
Recent Developments
- Positive Analyst Coverage: BofA’s lift of target prices for both Palo Alto Networks (PANW) and Zscaler (ZS) signals confidence in the broader cybersecurity and networking market.
- Market Dynamics: The shift to remote work and the increasing prevalence of sophisticated cyber threats continue to underpin demand for Zscaler’s solutions.
- Competitive Position: While Zscaler faces competition from legacy security vendors and newer cloud‑native entrants, its early mover advantage and strong integration capabilities with major cloud platforms help sustain its growth trajectory.
Outlook
With a rising target price and sustained demand for secure cloud connectivity, Zscaler is positioned to benefit from the ongoing digital transformation of enterprises. Investors will likely monitor the company’s ability to maintain revenue growth, improve profitability, and capitalize on strategic partnerships as key drivers of long‑term shareholder value.
