Zscaler (ZS) shares climbed 2.11% on Friday after KeyBanc Capital Markets raised its price target on the stock to $210 from $185 while maintaining an Overweight rating. The stock was trading at $178.65 at the time of writing. Zscaler sells cloud-delivered cybersecurity: its Zero Trust Exchange platform sits between users, applications and the internet, inspecting traffic and enforcing security policies without relying on traditional on-premises appliances.

Analyst Eric Heath said channel checks on Zscaler were "about steady" quarter over quarter. However, he noted that qualitative feedback on the company remains mixed, particularly regarding its role as a platform vendor and the competitive landscape.

One area of concern raised by Heath was a deterioration in go-to-market alignment between Zscaler and CrowdStrike sellers in the field. He noted that partners remain unclear on the exact cause of this friction. The dynamic is notable because the two companies announced a strategic partnership in 2024 to integrate their platforms and coordinate sales efforts, making field-level cooperation a relatively new variable for both vendors.

Despite those concerns, KeyBanc said it remains constructive on Zscaler. The firm pointed to an improved security spend environment and the company's leadership position in SASE as key reasons for its positive outlook. SASE, or Secure Access Service Edge, is the architecture that converges networking with cloud-delivered security, a market where Zscaler competes with rivals such as Netskope, Palo Alto Networks and Cloudflare for enterprise budgets.

KeyBanc also highlighted that segmentation has become a major focus for customers following the release of Claude Mythos. Segmentation refers to dividing networks into isolated zones so a compromised device or workload cannot move laterally across an environment. The firm believes Zscaler could be uniquely positioned in this area with its cloud security solution, which already inspects customer traffic inline, a vantage point typically relevant to enforcing segmentation policies.

Valuation was another factor in KeyBanc's bullish stance. Zscaler trades at 6.6 times revenues, compared with 10.7 times revenues for peers with more than 10% cyber growth, suggesting room for multiple expansion. Multiple expansion refers to a stock commanding a higher valuation multiple of its sales, which in this framing would close part of the gap to the peer group.

Fundamentals Still Strong

Zscaler's underlying business metrics support the constructive view. The company carries a gross profit margin of 77% and has posted revenue growth of 25%.

InvestingPro analysis has flagged the stock as undervalued at current levels, placing it on its most undervalued stocks list. Separately, forty-one analysts have revised their earnings estimates upward for the upcoming period.

Fiscal year 2027 guidance has already been soft-guided, which KeyBanc sees as a further reason for confidence heading into the next reporting cycle. Zscaler's fiscal year ends in July, so fourth-quarter fiscal 2026 results are the next scheduled report ahead of the October analyst day, a near-term calendar that frames the debate over the firm's thesis.

Analyst Day in October

KeyBanc pointed to Zscaler's upcoming analyst day in October as a potential catalyst. The firm sees an opportunity for the company to sharpen its messaging to investors at that event. Analyst days are commonly used to lay out product roadmaps, long-term financial frameworks and strategy priorities.

Alongside Zscaler, Heath raised price targets on several other cybersecurity names, including CrowdStrike (CRWD), Netskope (NTSK), Okta (OKTA), and Rubrik (RBRK), reflecting a broadly positive view on security spending.

Other Recent Analyst Moves

Other firms have also recently updated their views on Zscaler. Stifel raised its price target to $200 from $175 and kept a Buy rating, expecting at least in-line results for Zscaler's fourth-quarter fiscal 2026 earnings.

TD Cowen increased its target to $200 from $180 with a Buy rating, also anticipating in-line or better results in the upcoming report.

Cantor Fitzgerald reiterated its Overweight rating with a price target of $225, despite flagging slightly weaker channel check results for Q4 fiscal 2026 compared with the prior quarter.

Options activity around Zscaler has also picked up. A total of 39,437 contracts were traded recently, with call options making up the bulk at 34,601 contracts versus 4,836 put options. Calls typically gain value when a stock rises while puts benefit from declines, so the skew reflects positioning concentrated on the upside.