BMO Capital Markets Issues Pessimistic Forecast for Zscaler (NASDAQ:ZS) Stock Price

Key Points

• BMO Capital Markets cut its price target on Zscaler from $210 to $178, while keeping an outperform rating. The new target implies a slight downside from the stock’s current price.
• Zscaler reported better-than-expected fiscal Q3 results, with EPS of $1.08 and revenue of $850.5 million, up 25.4% year over year. The company also raised its fiscal 2026 EPS guidance.
• Despite strong quarterly performance, sentiment remains mixed because of weaker near-term revenue guidance and rising competition in cybersecurity, which have pressured the stock and lowered some analysts’ price targets.

Zscaler (NASDAQ:ZS - Get Free Report) had its target price cut by analysts at BMO Capital Markets from $210.00 to $178.00 in a report released on Wednesday. The brokerage presently has an "outperform" rating on the stock. BMO Capital Markets' target price would suggest a potential downside of 3.58% from the stock's current price.

Several other analysts have also recently weighed in on ZS. JPMorgan Chase & Co. cut their price objective on Zscaler from $354.00 to $267.00 and set an "overweight" rating on the stock in a research report on Friday, February 20th. Cantor Fitzgerald reaffirmed an "overweight" rating on shares of Zscaler in a research report on Wednesday, May 20th. Stephens cut their price objective on Zscaler from $340.00 to $225.00 and set an "overweight" rating on the stock in a research report on Monday, February 23rd. Evercore cut Zscaler from an "outperform" rating to a "cautious" rating in a research report on Wednesday. Finally, BTIG Research reissued a "neutral" rating on shares of Zscaler in a research report on Thursday, April 9th. Two research analysts have rated the stock with a Strong Buy rating, twenty-nine have issued a Buy rating, seven have given a Hold rating and three have issued a Sell rating to the company's stock. According to MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and an average target price of $245.80.

Zscaler Stock Up 1.2%

Shares of NASDAQ:ZS opened at $184.60 on Wednesday. Zscaler has a 1 year low of $114.63 and a 1 year high of $336.99. The company has a market cap of $29.68 billion, a PE ratio of -439.52 and a beta of 0.96. The company has a debt-to-equity ratio of 0.78, a current ratio of 1.90 and a quick ratio of 1.90. The stock's 50-day moving average is $145.75 and its 200 day moving average is $192.65.

Zscaler (NASDAQ:ZS - Get Free Report) last posted its quarterly earnings data on Tuesday, May 26th. The company reported $1.08 earnings per share for the quarter, beating the consensus estimate of $1.01 by $0.07. The business had revenue of $850.48 million for the quarter, compared to analysts' expectations of $835.60 million. Zscaler had a positive return on equity of 0.06% and a negative net margin of 2.25%.The business's revenue was up 25.4% on a year-over-year basis. During the same period in the previous year, the firm posted $0.84 EPS. Zscaler has set its Q4 2026 guidance at 1.080-1.090 EPS and its FY 2026 guidance at 4.100-4.110 EPS. Sell-side analysts anticipate that Zscaler will post -0.03 EPS for the current year.

Insider Transactions at Zscaler

In related news, EVP Raj Judge sold 2,488 shares of the company's stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total value of $389,595.92. Following the transaction, the executive vice president directly owned 67,906 shares of the company's stock, valued at approximately $10,633,400.54. This represents a 3.53% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, insider Adam Geller sold 2,094 shares of the company's stock in a transaction that occurred on Wednesday, March 18th. The shares were sold at an average price of $153.53, for a total value of $321,491.82. Following the completion of the transaction, the insider directly owned 46,949 shares in the company, valued at $7,208,079.97. This trade represents a 4.27% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last 90 days, insiders sold 12,130 shares of company stock worth $1,892,487. Company insiders own 17.20% of the company's stock.

Hedge Funds Weigh In On Zscaler

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Binnacle Investments Inc bought a new position in Zscaler in the 3rd quarter valued at approximately $25,000. Root Financial Partners LLC bought a new position in Zscaler in the 3rd quarter valued at approximately $26,000. Picton Mahoney Asset Management bought a new position in Zscaler in the 3rd quarter valued at approximately $30,000. AlphaCentric Advisors LLC bought a new position in Zscaler in the 4th quarter valued at approximately $29,000. Finally, University of Texas Texas AM Investment Management Co. bought a new position in Zscaler in the 4th quarter valued at approximately $30,000. 46.45% of the stock is owned by institutional investors.

Zscaler News Roundup

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler reported fiscal Q3 revenue of $850.5 million, up 25% year over year, and EPS of $1.08, both ahead of estimates, showing continued execution and demand for its cloud security platform. Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: The company raised full-year fiscal 2026 EPS guidance, signaling confidence in profitability despite ongoing investment in growth and AI security initiatives. ZS Q3 Earnings Call Flags Prudent Growth Outlook
• Positive Sentiment: B. Riley upgraded Zscaler to Buy from Neutral, citing product-line expansion and improving business momentum, though the firm lowered its price target. B.Riley Upgrades Zscaler (ZS) Rating to Buy Amid Product Line Expansion
• Neutral Sentiment: Zscaler continued to emphasize AI security as a growth driver, and commentary around record margins and recurring revenue suggests the long-term story remains intact. ZS Q3 Earnings Call Flags Prudent Growth Outlook
• Negative Sentiment: Investors reacted to weaker fourth-quarter revenue guidance and a lower free cash flow outlook, suggesting tougher near-term demand conditions and more cautious spending by customers. Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Several reports noted that competition is heating up in cybersecurity, which is weighing on sentiment around Zscaler’s ability to sustain rapid growth and premium valuation. Zscaler tumbles as mixed guidance outshines strong Q3 results

Zscaler Company Profile

Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.

Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.

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