Zscaler Tanked Over One Year: A Prominent Firm Says 50% Gains to Arrive in 12 Months or Less
While cybersecurity peers doubled in value over the past year, Zscaler slid past 30% and now sits at a crossroads where one bold analyst sees a very different story unfolding than the rest of Wall Street is willing to admit.
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Zscaler (NASDAQ:ZS | ZS Price Prediction) is priced at $198.36. Bernstein’s Street-high price target of $298.00 sits roughly 50.2% above that level.
Zscaler runs the Zero Trust Exchange, a cloud platform connecting users, workloads, branches and AI agents directly to applications without corporate network access. Management calls AI “the largest tailwind we have ever seen” for its products.
This disconnect is notable because Bernstein is far from the rest of the Street. The consensus target of $209.68 means only 5.7% upside. So either the market is mispricing a 25% grower, or one firm is well ahead of everyone else.
A One-Year Slide Past 30% Built on Slowing Growth
Decelerating growth did most of the damage. Shares are down 33.19% over the past year, which passes the 30% mark for a severe drawdown. The stock traded at $266.90 when Zscaler reported fiscal Q1 and had fallen to $151.50 by the fiscal Q2 report. Its 52-week range runs from $114.62 to $336.99.
Fiscal 2027 revenue growth is guided at 16.6% to 17.5%, down from 25.4% in fiscal 2026. Management cited moving past the Red Canary acquisition, sales leadership changes, “elevated churn” at Red Canary and cuts affecting approximately 3% of employees. Q4 capex jumped 177.72%, so quarterly free cash flow fell 64.66%. Shares are down 5.62% over the past week.
Bernstein Is Positioned for a Rerating Most of the Street Won’t Model
Bernstein analyst Peter Weed raised his target to $298.00 from $224.00 and kept an Outperform rating. His first focus is Zscaler’s shift to deeper enterprise relationships. Net revenue retention held at 115% in every quarter of fiscal 2026, and Fortune 500 penetration rose from 45% to 50%.
The second focus is AI expanding the addressable market. Security for AI bookings rose more than 50% sequentially in Q4, and pipeline grew 75%. Two new agent-security products are expected to scale in the second half of fiscal 2027. Guidance does not break out any AI contribution, so any surprise would come on top of the plan.
The third focus is valuation. Bernstein frames Zscaler as a discounted asset compared with Palo Alto. Zscaler trades at a forward P/E of about 44, versus roughly 94 for Palo Alto.
The wider Street leans positive: 8 analysts are highly bullish on the stock, 29 are bullish, 9 are neutral and none recommend selling. Fiscal 2027 EPS estimates received 35 up revisions in 30 days, lifting consensus to $4.9082.
Zscaler Fell Alone While Security Peers Doubled
The rest of the security group rallied, making Zscaler’s decline company-specific.
CrowdStrike (NASDAQ:CRWD) is up 115.16% over one year. At $262.74, it trades 10.3% above its $235.67 consensus target, even with 30 Buy and 10 Strong Buy ratings.
Palo Alto Networks (NASDAQ:PANW) is up 90.43%. With the stock at $388.41 and a $395.7 target, implied upside is only 1.9%. It has 33 Buy ratings and two sell-side dissenters.
Cloudflare (NYSE:NET) is up 61.16%. At $352.22, it sits 4.4% above its $336.81 target.
Zscaler is the only name in the group with upside to consensus. Its gains have not yet run past what analysts expect.
A Wide Gap Between Zscaler and the S&P 500
At $198.36, Zscaler sits 5.7% below the $209.68 consensus of 46 analysts and 50.2% below Bernstein’s target. Price targets are estimates, not promises.
Shares are down 33.19% over one year, while the S&P 500 gained 15.16%. Year to date, Zscaler is down 11.81%, and the index is up 12.08%. Over the past month, Zscaler gained 7.67%, while the index slipped 0.66%.
Why the Recovery Case Beats the Value-Trap Case, With Conditions
I’d lean bullish if Security for AI starts showing up in net new ARR in the second half of fiscal 2027 and retention holds at 115%. That would make 17% guidance look conservative and support the rerating Bernstein expects.
I’d stay cautious if sales leadership changes continue, Red Canary churn rises or capex stays high. Then Zscaler becomes a slowing grower that deserves its discount.
A roughly 44x forward multiple on a company that has beaten EPS estimates for 10 straight quarters prices in plenty of bad news. Getting to $298 depends on AI revenue appearing on schedule, so the next two reports matter most.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
