Zscaler (ZS) is back in focus after appointing seasoned marketer Nikhil Mehrotra as Senior Director of Marketing, along with reports that more than 700 enterprises are using its Zero Trust Everywhere platform.

Recent marketing hires and expanding Zero Trust Everywhere adoption come as Zscaler’s share price sits at US$149.82, with a 30 day share price return of 20.00% but a 1 year total shareholder return that has fallen 48.06%. This suggests improving short term momentum after a tougher period for longer term holders.

If Zscaler’s zero trust focus has your attention, this is a good moment to broaden your watchlist with other security and infrastructure plays using our 54 AI infrastructure stocks

The recent rebound in Zscaler, after a sharp 1 year pullback, leaves an obvious tension: are investors re-rating genuine business progress around Zero Trust Everywhere, or has sentiment simply swung too far the other way as the price moved?

Most Popular Narrative: 22.2% Undervalued

On the most followed narrative, Zscaler’s fair value of $192.58 sits well above the last close at $149.82, which frames the current Zero Trust Everywhere momentum in a very specific way.

The transition away from legacy security appliances (firewalls, SD-WAN) in favor of unified cloud-delivered security architectures is gaining momentum across key verticals like retail and manufacturing, supporting a multi-year replacement cycle that will boost platform adoption, revenue, and margins.

Want to see what sits underneath that multi year replacement story? The fair value hinges on a specific mix of sustained revenue growth, margin uplift, and a rich future earnings multiple that would usually be reserved for top tier software platforms. Curious which assumptions have to hold for that to add up?

Result: Fair Value of $192.58 (UNDERVALUED)

However, if cloud hyperscalers keep folding more security tools into their platforms, or if competition forces heavier sales spending, Zscaler’s growth-focused narrative could lose conviction.

Another View on Zscaler’s Valuation

The analyst narrative frames Zscaler as 22.2% undervalued at a fair value of $192.58, largely anchored to future earnings and multiples. Yet on simple sales based pricing, Zscaler trades on a P/S of 7.6x, which is high versus the US Software average of 3.6x and indicates expectations are already demanding.

Peers come in around 9.8x P/S and the estimated fair ratio sits at 8.3x, so Zscaler is cheaper than similar stocks but still priced at a premium to the wider industry. For you, the key question is whether the Zero Trust and AI story justifies paying a higher price for that middle ground.

Next Steps

If this mix of cautious and optimistic sentiment around Zscaler resonates, consider promptly reviewing the underlying data and forming your own view with the 3 key rewards and 2 important warning signs

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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.