TLDR
- On March 3, 2026, Wells Fargo launched coverage of Zscaler (ZS) with an Overweight rating and $200 price target.
- The bank views Red Canary-related concerns as temporary noise presenting an attractive buying opportunity.
- The firm projects sustained 20% growth powered by Zero Trust Exchange, data protection, and artificial intelligence initiatives.
- The company serves 45% of Fortune 500 companies and 40% of Global 2000 enterprises.
- Multiple analysts have recently lowered price targets while maintaining bullish stances on the stock.
On March 3, 2026, Wells Fargo launched its coverage of Zscaler (NASDAQ: ZS), assigning an Overweight rating alongside a $200 price objective.
Shares were changing hands at $148.58 during the announcement — hovering near the 52-week bottom of $140.56.
According to Wells Fargo’s research team, the recent controversy surrounding Red Canary presents what they consider an attractive buying window for investors.
The bank characterized Zscaler as a “large category winner expanding into platform,” noting that Red Canary-related concerns don’t alter the fundamental investment thesis.
Wells Fargo anticipates the company’s foundational business will hold steady as traction accelerates in emerging growth verticals.
These verticals encompass Zero Trust Exchange, data protection solutions, and artificial intelligence capabilities — all expected by the firm to support 20% growth rates moving ahead.
Zscaler delivered 24% revenue expansion over the trailing twelve-month period, while maintaining gross profit margins of 77%.
Strong Enterprise Foothold
The bank highlighted Zscaler’s extensive reach within major corporations as a primary catalyst for its optimistic outlook.
The platform serves 45% of Fortune 500 organizations, 40% of Global 2000 companies, and approximately 20% of businesses employing over 2,000 workers.
Wells Fargo dismissed worries about market saturation. The analysts argued these concerns lack merit, even when evaluating new customer acquisition potential.
Their total addressable market assessment indicates fresh customer acquisitions could generate $300 million to $400 million in annual revenue, assuming approximately 700 new client wins each year.
InvestingPro highlighted that Zscaler looks underpriced at present valuations, noting 37 analysts have recently increased their earnings projections.
Recent Earnings Beat Estimates
Zscaler delivered Q2 fiscal 2026 performance that surpassed analyst predictions on all key metrics.
Revenue expanded 26% compared to the prior year, while annual recurring revenue climbed 25%.
Non-GAAP earnings per share reached $1.01, exceeding the $0.86 Street estimate. Revenue totaled $815.8 million, beating the $798.8 million forecast.
Despite the impressive quarterly performance, several Wall Street firms reduced their price objectives following the report.
TD Cowen trimmed its target to $220 from $260, pointing to market contraction concerns. BMO Capital reduced its figure to $210 from $315 on questions about sustained growth momentum.
Stifel decreased its target to $180 from $320 while recognizing results beat internal projections. RBC Capital adjusted to $205 from $250 due to guidance considerations.
Citizens modified its target to $290 from $355 based on valuation factors. All five institutions maintained their bullish ratings despite the adjustments.
Wells Fargo’s $200 price objective, established at coverage initiation, falls beneath several of those recently revised targets — yet remains above current trading levels.
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