For over 15 years, Zscaler (ZS) has stood tall as a pillar in cloud security, shielding close to 45% of the Fortune 500. The company runs the world’s largest cloud security platform, which processes an astounding 500 billion transactions each day. 

In its latest stride, Zscaler has inked a definitive agreement to acquire Red Canary, a trusted name in Managed Detection and Response (MDR). The move brings together Zscaler’s deep reservoir of high-quality data and global threat intelligence from its ThreatLabz Security Research team with Red Canary’s MDR strength. 

The result is expected to be a powerful, agentic Security Operations Center (SOC) that fuses artificial intelligence (AI)-led workflows with seasoned human expertise. With Wall Street analysts hinting that this deal could catapult Zscaler further into MDR territory, the timing might just be ripe for investors to give the “Strong Buy” shares a serious look.

About Zscaler Stock

Zscaler (ZS), based in San Jose, California, is a pioneer in the cloud-based security landscape. With a market cap of $39.2 billion, it delivers an end-to-end suite of services that covers web and internet security, antivirus, firewalls, vulnerability management, and oversight across mobile, cloud, and Internet of Things environments.

Over the past 52 weeks, ZS stock has surged by 54%. Year-to-date, it has not missed a beat either, climbing 40% and proving that momentum is very much on its side. 

Zscaler Surpasses Q2 Earnings Estimates

On March 5, Zscaler unveiled its fiscal Q2 2025 earnings which topped Wall Street forecasts. Revenue surged to $647.9 million, marking a 23.4% year-over-year increase and comfortably outpacing analyst estimates of $634.4 million. The company’s operational engine kept humming as non-GAAP gross profit rose 22.9% to $520.8 million.

Equally compelling was the 27.8% climb in non-GAAP net income, which reached $127.1 million, while non-GAAP EPS rose 23.8% to $0.78, handily exceeding Wall Street’s projection of $0.69.

As of Jan. 31, 2025, Zscaler held $1.8 billion in cash and cash equivalents, a notable increase from $1.4 billion on July 31, 2024. 

Looking ahead, the management believes the company is on track to hit $3 billion or more in annual recurring revenue by fiscal year-end, riding on the back of an expanding pipeline and stronger sales execution. Zscaler is scheduled to release its fiscal Q3 2025 earnings on Thursday, May 29 after the market closes. 

Management’s expectations for Q3 include revenue between $665 million and $667 million and non-GAAP EPS of $0.75 to $0.76. For the full fiscal 2025, revenue is expected to reach $2.640 billion to $2.654 billion, with EPS between $3.04 and $3.09. 

Analysts, however, predict a Q3 loss per share widening 120% year over year to $0.03, before narrowing 56% to $0.11 for full fiscal 2025 and improving 163.6% further to $0.07 in fiscal year 2026.

What Do Analysts Expect for Zscaler Stock?

Zscaler’s acquisition of Red Canary marks a powerful leap forward, drawing strong support from Wall Street. Wells Fargo analyst Andrew Nowinski estimates the deal cost between $800 million and $1 billion, based on Red Canary’s $140 million in ARR and positive free cash flow in the January quarter.

Nowinski emphasizes that combining Zscaler’s extensive data with Red Canary’s managed detection and response platform will significantly enhance threat intelligence and security operations. He holds an “Equal Weight” rating with a $210 price target, reflecting steady confidence.

Moreover, Oppenheimer analyst Ittai Kidron, with an “Outperform” rating, sees the acquisition as a catalyst for accelerating adoption of Zscaler’s Risk360 and Avalor offerings. 

Wall Street has placed a “Strong Buy” rating on ZS. Out of 40 analysts following the stock, 29 endorse a “Strong Buy,” two lean toward a “Moderate Buy,” and nine suggest holding the position. The Street-high target of $295 represents potential upside of 18% from the current price.