Zscaler Upgraded to Outperform with $228 Target, Buys SquareX to Boost Browser Security
Bernstein raised Zscaler to Outperform with a $228 target on Feb 13, highlighting its valuation as the cheapest cybersecurity vendor despite expected growth slowing to sub-20% by 2028. The company acquired SquareX on Feb 5 to add zero-trust browser extensions, enhancing its security platform.
1. Analyst Rating Changes
On February 13, Bernstein upgraded Zscaler to Outperform from Market Perform, setting a $228 price target and citing its valuation as the lowest among cybersecurity vendors. Earlier on February 11, RBC Capital reduced its own target to $250 from $290 while maintaining an Outperform rating, reflecting broader software sector multiple compression and slower AI monetization clarity.
2. SquareX Acquisition Details
Zscaler completed the acquisition of SquareX on February 5, integrating its browser-based zero-trust extension technology into Zscaler’s existing security suite. The deal, with undisclosed financial terms, aims to eliminate the need for third-party browsers and broaden the company’s secure access offerings.
3. Growth Outlook and Customer Trends
Despite being labeled the cheapest vendor, Zscaler is forecast to see revenue growth dip below 20% by 2028, with customer additions anticipated to run 25%–35% slower than pre-2024 levels. Management’s focus on expanding zero-trust capabilities through acquisitions and platform enhancements is central to sustaining its competitive edge.