Zscaler (ZS) Expands Carahsoft Tie Up As Zero Trust Optimism Tests Fair Value
Zscaler (ZS) is back in focus after it expanded its partnership with Carahsoft to push its Zero Trust Exchange deeper into U.S. small and mid-sized businesses, a move that intersects with stronger interest in SASE leaders.
See our latest analysis for Zscaler.
The partnership news lands after a mixed run for Zscaler, with the share price gaining 27.7% over the last 30 days but the year to date share price return declining 17.6%. Over the last year, the total shareholder return is down 33.31%, while the 3 year total shareholder return is up 27.31%. This suggests shorter term momentum has picked up even as longer term holders have experienced more muted results overall.
If this Zero Trust push has your attention, it could be a good moment to widen your watchlist and check out 55 AI infrastructure stocks
Zscaler’s recent rebound and the Carahsoft expansion put the question in front of you now: Is today’s price a fair way to get exposure to that Zero Trust push, or is it worth waiting for a cheaper entry before acting?
Most Popular Narrative: 7.7% Undervalued
The most followed narrative values Zscaler at $196.95 per share, compared with the last close of $181.75. That gap is all about how you view future AI security demand and Zero Trust adoption.
Accelerating customer adoption of Zero Trust Everywhere and Data Security Everywhere solutions, particularly among Global 2000 and Fortune 500 firms, is fueling large upsell deals and higher ARR per customer, which should drive sustained double-digit revenue growth and improve net retention rates.
Curious what sits behind that valuation call on Zscaler? The narrative leans heavily on compounded revenue expansion, a turn to consistent profits, and a premium future earnings multiple. The exact assumptions might surprise you.
Result: Fair Value of $196.95 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this Zscaler narrative can unravel if public cloud providers fold more security into their platforms, or if rising competition forces heavier spending and weaker margins.
Find out about the key risks to this Zscaler narrative.
Another View on Zscaler’s Valuation
The first narrative leans on future earnings and a high implied P/E, but Zscaler also trades on a rich P/S ratio of 9.3x. That is higher than the US Software industry at 4x and above its own fair ratio of 8.8x, which raises questions about how much optimism is already in the price.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
If this mix of optimism and concern around Zscaler resonates with you, consider reviewing the situation while it is still current and examine the data yourself with 2 key rewards and 2 important warning signs
Looking for more investment ideas beyond Zscaler?
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- Target potential mispricings by scanning 48 high quality undervalued stocks that combine solid fundamentals with room for the market to reassess them.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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