Coforge’s announcement of its SecureEdge2Cloud Zero Trust solution built on the Zscaler (ZS) Zero Trust Exchange has put new attention on Zscaler stock as investors consider what this AI-focused partnership means for growth.
Check out our latest analysis for Zscaler.
Despite the partnership with Coforge highlighting Zscaler’s role in AI-driven security, the stock has been volatile, with shares down 5.3% over the past day and 5.5% over the past week. The company still has a 30-day stock return of 11.7% and a 90-day stock return of 18%, but its long-term one-, three-, and five-year total shareholder returns have been depressed. This shows that recent momentum has been building from a lower base.
If you’re evaluating how the AI-themed security story translates into a broader opportunity, now’s a good time to scan these 52 AI infrastructure stocks.
Zscaler’s recent recovery leaves important tensions against the backdrop of low one- to five-year shareholder returns. Are investors starting to re-price the business, or is sentiment simply recovering after a sharp reset?
Most popular story: 27.7% are underrated
Zscaler’s last closing price was $139.27 versus the widely supported fair value estimate of $192.58, with current pricing well below that narrative view. This view relies heavily on long-term zero trust and AI security demands.
The transition from traditional security appliances (firewalls, SD-WAN) to integrated cloud-delivered security architectures is gaining momentum across major industries such as retail and manufacturing, supporting multi-year replacement cycles that drive platform adoption, revenue, and profits.
Read the whole story. Read the whole story.
Want to know what revenue curve and margin profile justifies Zscaler’s higher fair value? This story focuses on compounding growth, increasing profitability, and future revenue multiples often associated with premium software leaders. The tension lies in how quickly these assumptions are triggered and how long they can be maintained.
Result: Fair value $192.58 (undervalued)
Read the full explanation to understand what’s behind the predictions.
But there are still obvious risks to Zscaler’s story, including increased pressure from major cloud providers to tighten security and operational questions about revenue and new customer growth.
Find out about the key risks to this Zscaler story.
Another perspective: Zscaler on sales-based valuations
The initial discussion framed Zscaler as undervalued by 27.7% using a fair value estimate of $192.58. However, on a simple P/S basis, the stock trades at 7.1 times, which is expensive compared to the US software industry, which is over 3.5 times and has a low one-year return. This gap forces you to weigh perceived quality against evaluation risk.
Check out our ratings breakdown to see what the numbers say about this price. See what the numbers say about this price. Please check the rating breakdown.
next step
With sentiment towards Zscaler split between risks and rewards, now is the time to take a look at the details for yourself, weigh the 3 major rewards and 2 key warning signs, and act with intention.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
Evaluation is complex, but we will simplify it here.
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