Analysts Bullish on Zscaler's Cybersecurity Dominance, Citing High Client Switching Costs as Key Moat
In the volatile world of cybersecurity stocks, Zscaler Inc. (NASDAQ: ZS) continues to draw bullish endorsements from Wall Street. Investment firm Citizens recently reiterated its Market Outperform rating and $355 price target, pointing not to flashy growth metrics, but to a more foundational strength: the significant operational hurdles clients face when considering a switch to a competitor.
"The competitive moat here is practical, not just technological," said a Citizens analyst in a note to clients. The firm detailed that onboarding a new network security provider typically takes between 50 to 180 days, a period during which companies must often pay both their incumbent and new vendor. Combined with high switching costs and transfer complexities, these factors create powerful inertia, leading to robust client retention even when some customers explore downgrading services.
This analysis follows a similar upgrade from Mizuho Securities in December, which moved Zscaler to an Outperform rating. While Mizuho noted a desire for more clarity on near-term organic growth, it affirmed Zscaler's strong positioning within the critical SASE (Secure Access Service Edge) and Zero Trust security frameworks—markets expected to expand as cloud adoption deepens.
Zscaler's cloud-native platform secures user access to applications and data, a model that has become increasingly central as hybrid work environments persist. The analysts' consensus suggests that the very complexity of enterprise cybersecurity, once a challenge for vendors, now acts as a durable barrier to entry for rivals and a stabilizer for Zscaler's recurring revenue.
Market Voices: Reactions from the Street
David Chen, Portfolio Manager at Horizon Capital: "This is a classic case of 'stickiness' driving long-term value. The Citizens report validates the thesis that best-of-breed cloud security platforms become deeply embedded. It's less about the next quarter's billings and more about the multi-year revenue visibility."
Sarah Miller, Chief Technology Officer at a mid-sized logistics firm: "As a Zscaler client, this rings true. The thought of migrating our global access policies to another vendor is a year-long project nightmare we simply don't have the resources for. Their platform works, but the lock-in is real."
Marcus Thorne, independent tech analyst: "Let's call this what it is: vendor captivity dressed up as a 'competitive moat.' These analysts are celebrating high switching costs as a positive. It signals a market that isn't functioning competitively. Customers are trapped by design, not by superior product love. This isn't innovation; it's exploitation of complexity."
Riya Patel, Cybersecurity Venture Partner: "The focus on retention metrics is smart. In a uncertain macro climate, investors are shifting from pure growth chasing to quality of revenue. Zscaler's model, backed by these operational barriers, provides that downside cushion, even if top-line growth moderates."