Analyst Daniel Bartus also increased his target price to $68 from $65, saying the opportunity for Zscaler was too big to ignore. He also cited a 48% stock-price decline since July 2019.
At last check Zscaler shares were 8.8% higher at $50.38.
In a note to investors, Bartus said that in the near term he expected the San Jose, Calif., company "to dominate the secure web gateway market, which represents a roughly $3 billion opportunity."
Bartus sees "some convergence of the SWG, firewall, cloud access security broker, data loss prevention, advanced threat protection, and more as part of a Zero Trust cloud middleman."
Zscaler, he wrote, "may be best positioned to achieve this convergence, given that the majority of Zscaler's top customers are already purchasing all of these products."
He also said the "major trend" of consolidation and outsourcing of security appliances should persist "for the next few years".
In September, Zscaler reported disappointing full-year guidance, saying it expected to make 12 cents to 15 cents a share on revenue of between $395 million and $405 million for the full year.
Analysts had been looking for adjusted earnings of 19 cents a share on revenue of $402.9 million.
For the quarter, Zscaler reported earnings of 7 cents a share on revenue of $86.1 million. Analysts had been looking for earnings of 1 cent a share on sales of $82.8 million.
For the year-earlier quarter the company posted a loss of 1 cent a share on sales of $56.2 million.