Zscaler hit the Street's $233 target before its new sales chief reported a quarter
An AI-found flaw in PHP, eleven price-target raises and a $270 bull call have carried ZS back to the Street's $233 mean at 47 times forward earnings. Late November brings the first quarter under the sales chief who inherited the machine.
Vincent Jiang · 3 min read
Two holes in a 30-year-old language did the buying
On October 21, PHP, the language behind about 70% of the web, shipped emergency patches for two flaws that let attackers run code on unpatched servers, holes found by AI models at OpenAI$1.18T — OpenAI, private, latest valuation $1.18T, Wiz and the research firm Calif before criminals got there 5. Buyers treated the patch as a revenue event: Zscaler+6.50% — Zscaler, up 6.50 percent today rose 7.4% to $230.38 that day 6, rose again Thursday 2, and by Friday morning traded at $237, past the Street's $233 average price target 17.
Back at the mean, at 47 times earnings
The rally completed a 14% month and an 85% rebound since April, and lifted the forward earnings multiple from 28x in late June to about 47x, still under the four-year average near 64x 12. A $34.98 billion company 3 now sits at the consensus target, a number that has itself climbed from $193 in mid-July 1.
The re-rating prices a handover nobody has reported yet
Chief revenue officer Mike Rich built the sales overhaul that lifted net-new ARR growth to 17% in the July quarter from 7% a year earlier; he left in September, the stock fell 10% in a day, and CFO Kevin Rubin had tied part of the cautious fiscal 2027 guide to the leadership change 1.
The October 6 Investor Day reaffirmed that guide, with CEO Jay Chaudhry calling agentic AI "the most significant opportunity in our company's history" and pointing to a $10 billion ARR target 7. Eleven firms raised targets the next morning, Evercore−1.04% — Evercore, down 1.04 percent today ISI to $195, Baird to $285 1. The Street has repriced as settled the one risk Zscaler's own CFO named, before new chief revenue officer Ross Tackett has reported a single quarter 17.
What November has to hold
Revenue growth has run near 25% for four straight quarters 9, and the fiscal 2027 guide steps it down to 16.6–17.5% 8. July-quarter ARR grew 25%, but $141 million of that came from the Red Canary acquisition 8; the newer growth engines, the ones meant to carry the next leg, grew ARR 60% combined last year 1. Insiders sold $23.4 million of stock over 12 months without a single purchase, twelve of those sales in the past three months 3.
Growth has held near 25% for four quarters; the fiscal 2027 guide steps down to 17%
Data
| Revenue growth | |
|---|---|
| Q3 '23 | 39.7% |
| Q4 '23 | 35.4% |
| Q1 '24 | 32.1% |
| Q2 '24 | 30.3% |
| Q3 '24 | 26.4% |
| Q4 '24 | 23.4% |
| Q1 '25 | 22.6% |
| Q2 '25 | 21.3% |
| Q3 '25 | 25.5% |
| Q4 '25 | 25.9% |
| Q1 '26 | 25.4% |
| Q2 '26 | 24.9% |
The bull calls sit above a $233 mean the stock has already reached
Data
| Value | |
|---|---|
| Evercore ISI | $195 |
| D.A. Davidson (Neutral) | $215 |
| Street mean, 47 analysts | $233 |
| Freedom Broker (Buy) | $270 |
| Baird | $285 |
The wave is real, and it is already in the model
The bull case has substance: every PHP release of the past decade is exposed to at least one of the new flaws 5, and Zscaler's ThreatLabz data shows enterprise AI traffic up 83% in 2025 across roughly 9,000 organizations, with 410 million data-loss violations tied to ChatGPT alone 4. "What's happening in cybersecurity is a COVID-like wave," Dragonfly managing partner Haseeb Qureshi posted 2.
Yet consensus already carries revenue from $3.35 billion to $5.33 billion by fiscal 2029 2. D.A. Davidson initiated at Neutral, $215, on October 21, calling the stock close to fairly valued at roughly 33 times calendar-2027 free cash flow 36; Freedom Broker went to $270 the next morning 2. The wave has to push budgets past what is modeled to move the stock from here.
Five weeks to the first Tackett quarter
Fiscal Q1 lands in late November, guided to $935–939 million, up about 19% 8. Watch net-new ARR and the 60% engines: the May report cost 31.5% in a day 1, and a stock at its mean target gives a first-time sales chief no cushion. The Investor Day guide and the insider sale notices are mapped in earlier reporting.
What happens next
ZSDo net-new ARR and the 60% growth engines hold under the new sales chief, or does the stock reprice as it did in May?
The case for
Enterprise AI traffic up 83% in 2025 and every PHP release of the past decade exposed to the new flaws: the demand wave is real
The case against
47 times forward earnings with fiscal 2027 growth guided down to 16.6–17.5%
- Late November 2026Zscaler fiscal Q1 2027 earnings, first under CRO Ross Tackett.
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