This seems to work on your string but no further testing done so caveat emptor :-) You were replacing 'foo' because you matched it explicitly in the LHS of the substitution.

$ perl -le '
> $str = q{foo=bar&blah=ha};
> $str =~ s{(?<=foo=)[^&]+(?=&|\z)}{TEST}g;
> print $str;'
foo=TEST&blah=ha
$
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Cheers,

JohnGG