Citigroup Issues Pessimistic Forecast for Zscaler (NASDAQ:ZS) Stock Price

Key Points

• Citigroup cut its price target on Zscaler from $205 to $175, though it kept a buy rating; the new target still implies about 38% upside from the current share price.
• Zscaler’s stock fell sharply, dropping 31.5% to $126.52 on heavy volume, leaving it well below both its 50-day and 200-day moving averages and near its 52-week low.
• Despite the selloff, the company posted strong quarterly results, with EPS of $1.08 and revenue of $850.5 million both beating estimates, and revenue rising 25.4% year over year.

Zscaler (NASDAQ:ZS - Get Free Report) had its price objective reduced by stock analysts at Citigroup from $205.00 to $175.00 in a report released on Wednesday,Benzinga reports. The firm presently has a "buy" rating on the stock. Citigroup's target price would indicate a potential upside of 38.32% from the stock's current price.

A number of other analysts have also recently commented on ZS. Canaccord Genuity Group cut their price objective on Zscaler from $275.00 to $210.00 and set a "buy" rating for the company in a research report on Wednesday. Evercore set a $155.00 price objective on Zscaler and gave the company an "in-line" rating in a report on Wednesday. Oppenheimer cut their price objective on Zscaler from $280.00 to $250.00 and set an "outperform" rating on the stock in a report on Tuesday, March 10th. Wells Fargo & Company started coverage on Zscaler in a report on Tuesday, March 3rd. They issued an "overweight" rating and a $200.00 price objective on the stock. Finally, Rosenblatt Securities cut their price objective on Zscaler from $223.00 to $200.00 and set a "buy" rating on the stock in a report on Wednesday. One investment analyst has rated the stock with a Strong Buy rating, thirty-one have given a Buy rating, eight have given a Hold rating and two have given a Sell rating to the stock. Based on data from MarketBeat.com, Zscaler presently has an average rating of "Moderate Buy" and an average price target of $219.59.

Zscaler Trading Down 31.5%

ZS traded down $58.08 during trading on Wednesday, reaching $126.52. The company had a trading volume of 25,272,143 shares, compared to its average volume of 3,137,971. The stock has a market cap of $20.34 billion, a P/E ratio of -301.15 and a beta of 0.96. The business has a 50 day simple moving average of $145.75 and a 200-day simple moving average of $192.65. Zscaler has a 52 week low of $114.63 and a 52 week high of $336.99. The company has a quick ratio of 1.90, a current ratio of 1.90 and a debt-to-equity ratio of 0.78.

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

Insider Activity at Zscaler

In other Zscaler news, EVP Raj Judge sold 2,488 shares of the company's stock in a transaction dated Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total transaction of $389,595.92. Following the sale, the executive vice president owned 67,906 shares in the company, valued at $10,633,400.54. This represents a 3.53% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, insider Robert Schlossman sold 2,263 shares of Zscaler stock in a transaction dated Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total value of $354,363.17. Following the sale, the insider owned 72,390 shares in the company, valued at $11,335,550.10. This trade represents a 3.03% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold 12,130 shares of company stock worth $1,892,487 over the last quarter. 17.20% of the stock is currently owned by insiders.

Institutional Trading of Zscaler

Hedge funds have recently modified their holdings of the business. Vanguard Group Inc. raised its holdings in Zscaler by 0.5% during the fourth quarter. Vanguard Group Inc. now owns 11,423,424 shares of the company's stock worth $2,569,357,000 after purchasing an additional 55,521 shares during the last quarter. Groupama Asset Managment boosted its position in shares of Zscaler by 76,352.6% in the third quarter. Groupama Asset Managment now owns 4,750,000 shares of the company's stock worth $1,423,385,000 after acquiring an additional 4,743,787 shares during the last quarter. First Trust Advisors LP boosted its position in shares of Zscaler by 36.2% in the first quarter. First Trust Advisors LP now owns 3,518,678 shares of the company's stock worth $493,635,000 after acquiring an additional 935,781 shares during the last quarter. Price T Rowe Associates Inc. MD boosted its position in shares of Zscaler by 43.3% in the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company's stock worth $578,576,000 after acquiring an additional 777,414 shares during the last quarter. Finally, State Street Corp grew its position in Zscaler by 3.4% during the fourth quarter. State Street Corp now owns 2,337,604 shares of the company's stock valued at $525,774,000 after acquiring an additional 77,800 shares during the period. 46.45% of the stock is owned by institutional investors and hedge funds.

Key Zscaler News

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler beat fiscal Q3 expectations, posting $1.08 EPS versus $1.01 expected and revenue of $850.5 million versus $835.6 million expected, with revenue up 25% year over year and ARR also growing 25%. Article: Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: The company also raised FY2026 EPS guidance, and several analysts still kept bullish ratings despite trimming price targets, suggesting the long-term thesis remains intact. Article: Zscaler Earnings Are Imminent; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call
• Neutral Sentiment: Commentary around AI security and cybersecurity demand remains constructive, with articles noting Zscaler’s positioning as an AI-era security platform and possible share gains over time. Article: Zscaler Stock Drops 30%: Why the Dip Is a Buy Opportunity
• Negative Sentiment: Management’s Q4 revenue outlook of $875 million to $878 million came in slightly below consensus, raising concern that growth could slow as competition intensifies and enterprise spending gets more selective. Article: Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Reports also pointed to sales leadership departures and a weaker free cash flow outlook, which added to the selloff and prompted a fraud-investigation headline from a law firm. Article: ZS Investors Have Opportunity to Join Zscaler, Inc. Fraud Investigation with the Schall Law Firm

About Zscaler

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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