Zscaler: A Spectacular Growth Stock Down 44% to Buy Right Now, According to Wall Street

Zscaler (ZS), a leader in zero-trust cybersecurity, has seen its stock plummet 44% from its 2021 high, presenting an attractive buying opportunity, according to Wall Street. The company's platform, which treats every login attempt as hostile, has become increasingly valuable as remote work and cloud computing have surged. With over 9 billion security violations stopped daily, Zscaler's platform is in high demand. The company's strong revenue growth, up 26% year-over-year in Q1 2025, and improving profitability, with a 64% reduction in net loss, indicate a robust business model. Moreover, analysts are bullish, with 26 out of 45 giving Zscaler a 'buy' rating and a consensus price target implying a 9% upside. The stock's current P/S ratio of 13.6 is significantly below its average of 26.9, suggesting there's room for growth.

Zscaler's focus on zero-trust security has evolved to address emerging cyber threats. In 2024, spyware attacks surged 111% year-over-year, highlighting the need for robust security measures. Zscaler's Zero-Trust Exchange platform treats every login attempt as hostile, analyzing user credentials, location, and device to verify identity. It also restricts access to only necessary digital applications, preventing unauthorized access even if credentials are compromised. AI plays a crucial role in identity verification, enabling swift task completion. Additionally, Zscaler is expanding its product portfolio to secure AI deployments, such as chatbots and virtual assistants, further bolstering its security offerings.

The specific features of Zscaler's platform make it a leader in the zero-trust cybersecurity market. It treats every login attempt as hostile, analyzing not only the person's username and password but also their location and the device they are using. This multi-factor authentication enhances security by ensuring that only authorized users can access sensitive data. Additionally, Zscaler's platform only connects employees to the digital applications required for their job, limiting potential damage even if a malicious actor breaches the identity layer. Furthermore, the platform leverages artificial intelligence to complete identity verification tasks in seconds, improving efficiency and accuracy.

Zscaler's AI-driven approach to cybersecurity enhances its competitive advantage by enabling rapid identity verification and restricting access to sensitive information. Its Zero-Trust Exchange platform treats every login attempt as hostile, analyzing not only the person's username and password but also their location and the device they are using. This ensures that even if a malicious actor breaches the identity layer, they can't access the organization's entire network or compromise sensitive data. Additionally, Zscaler's AI tools help identify high-risk renters, reducing the likelihood of property damage or loud parties, and secure AI copilots, chatbots, and virtual assistants by restricting their access to sensitive information and preventing data leaks.



Zscaler's revenue growth and improving profitability are key contributors to its long-term investment potential. In its fiscal 2025 first quarter, Zscaler generated a record $628 million in revenue, a 26% increase from the year-ago period, and comfortably above management's forecast. This strong result prompted management to increase revenue guidance for the fiscal 2025 full year to $2.63 billion. Additionally, Zscaler's bottom line improved, with a 64% reduction in its net loss on a GAAP basis and a 43% jump in adjusted profit. This balance between growth and profitability indicates a sustainable business model for the long term.

In conclusion, Zscaler's focus on zero-trust security, strong revenue growth, and improving profitability make it an attractive investment opportunity, despite its recent stock price decline. The company's innovative approach to cybersecurity, combined with its AI-driven tools, positions it well to capitalize on the growing demand for robust security measures in the digital age. With a bullish outlook from Wall Street analysts and a P/S ratio significantly below its average, Zscaler is a compelling choice for investors seeking growth and value in the cybersecurity sector.