Zscaler Upgraded by Barclays, PT Cut to $228 with 115% Retention
Barclays upgraded Zscaler from equalweight to overweight while lowering its price target to $228 from $264. The firm cites net revenue retention above 115% driven by upselling, but notes new customer growth has fallen from about two-thirds to roughly 30%.
1. Barclays Upgrades Rating
On February 13, Barclays moved Zscaler’s rating from equalweight to overweight, signaling increased confidence in the company’s long-term growth prospects despite recent market headwinds.
2. Price Target Reduction
Barclays lowered its price target by 13.6% to $228 from $264, reflecting more cautious near-term expectations as competition intensifies and revenue growth stabilizes.
3. Strong Revenue Retention
The firm highlighted Zscaler’s net revenue retention rate exceeding 115%, attributing this performance to successful upselling and cross-selling within its existing customer base.
4. Declining Customer Growth
Barclays noted that the contribution from new customers has dropped from roughly two-thirds of net new revenue to about 30%, raising concerns about sustainable expansion.