Baird Financial Group Inc. Decreases Position in Zscaler, Inc. $ZS

Key Points

• Baird Financial Group cut its Zscaler stake by 13.7% in the second quarter, selling 5,357 shares and retaining 33,808 shares valued at approximately $4.77 million. Institutional investors collectively own 46.45% of the company.
• Zscaler exceeded quarterly expectations, reporting $1.19 in adjusted EPS and $898.19 million in revenue, up 24.9% year over year. Analysts remain broadly positive, with a “Moderate Buy” consensus and an average price target of $216.53.
• Growth and valuation remain key risks: fiscal 2027 growth is expected to slow to roughly 17% from 25% in fiscal 2026, while the stock’s recent rally and premium sales multiple leave it vulnerable if growth disappoints.

Baird Financial Group Inc. reduced its stake in Zscaler, Inc. (NASDAQ:ZS - Free Report) by 13.7% during the 2nd quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor owned 33,808 shares of the company's stock after selling 5,357 shares during the period. Baird Financial Group Inc.'s holdings in Zscaler were worth $4,772,000 at the end of the most recent reporting period.

A number of other hedge funds and other institutional investors have also recently bought and sold shares of ZS. BlackRock Inc. purchased a new position in shares of Zscaler in the 2nd quarter valued at $1,396,028,000. First Trust Advisors LP increased its position in Zscaler by 36.2% during the first quarter. First Trust Advisors LP now owns 3,518,678 shares of the company's stock worth $493,635,000 after buying an additional 935,781 shares during the period. Geode Capital Management LLC lifted its stake in Zscaler by 5.0% in the fourth quarter. Geode Capital Management LLC now owns 2,069,630 shares of the company's stock valued at $464,783,000 after buying an additional 98,140 shares during the last quarter. Pictet Asset Management Holding SA raised its position in Zscaler by 52.5% in the 1st quarter. Pictet Asset Management Holding SA now owns 1,920,540 shares of the company's stock valued at $269,285,000 after purchasing an additional 661,413 shares during the last quarter. Finally, Amundi boosted its stake in Zscaler by 12.8% during the 2nd quarter. Amundi now owns 1,137,837 shares of the company's stock worth $160,606,000 after purchasing an additional 129,563 shares during the period. 46.45% of the stock is currently owned by hedge funds and other institutional investors.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: ZS benefited from a broad cybersecurity-sector rally after warnings about AI safety risks increased expectations for demand for security software. Zscaler rose alongside CrowdStrike and Palo Alto Networks as investors viewed cybersecurity as a key defense against emerging AI threats. Zscaler Stock Jumps 17% as AI Safety Comments Drive Cybersecurity Rally
• Positive Sentiment: Management said AI is “the largest tailwind we have ever seen,” supporting the long-term demand outlook for Zscaler’s cloud security platform. The company ended fiscal 2026 with approximately 25% annual recurring revenue growth, reinforcing its position as an AI-related cybersecurity beneficiary. Zscaler’s AI Story Is Accelerating, Its Growth Guide Isn’t
• Neutral Sentiment: Options activity was unusually heavy, with traders buying 34,160 call contracts—about 22% above typical daily call volume. The activity may signal bullish positioning, but it does not guarantee sustained buying in the shares.
• Negative Sentiment: The main concern is that fiscal 2027 guidance points to growth slowing to roughly 17%, or the mid-teens, from 25% in fiscal 2026. That creates a disconnect between management’s strong AI commentary and its more cautious near-term outlook. Zscaler ARR Growth and Fiscal 2027 Guidance
• Negative Sentiment: Valuation remains demanding after a roughly 48% three-month gain. Near $190, ZS trades at about 9.3 times sales versus approximately 3.2 times for the S&P 500, leaving the stock vulnerable if growth decelerates more than expected. What Growth Are You Paying For In Zscaler Stock?

Insider Activity

In other news, insider Adam Geller sold 2,817 shares of Zscaler stock in a transaction that occurred on Monday, June 22nd. The shares were sold at an average price of $122.60, for a total transaction of $345,364.20. Following the sale, the insider owned 42,314 shares in the company, valued at $5,187,696.40. This trade represents a 6.24% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Kevin Rubin sold 503 shares of the company's stock in a transaction dated Tuesday, August 25th. The shares were sold at an average price of $173.38, for a total transaction of $87,210.14. Following the completion of the transaction, the chief financial officer directly owned 40,895 shares of the company's stock, valued at approximately $7,090,375.10. The trade was a 1.22% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last quarter, insiders have sold 6,945 shares of company stock worth $897,536. Company insiders own 17.20% of the company's stock.

Analyst Upgrades and Downgrades

A number of research firms have recently issued reports on ZS. Deutsche Bank Aktiengesellschaft reissued a "buy" rating on shares of Zscaler in a report on Friday, September 4th. UBS Group lowered their target price on shares of Zscaler from $260.00 to $225.00 and set a "buy" rating on the stock in a report on Wednesday, May 27th. Morgan Stanley boosted their price target on shares of Zscaler from $145.00 to $165.00 and gave the stock an "equal weight" rating in a research note on Friday, September 4th. Wolfe Research reissued an "outperform" rating and set a $150.00 price target on shares of Zscaler in a report on Thursday, June 11th. Finally, Wells Fargo & Company raised their price objective on shares of Zscaler from $210.00 to $215.00 and gave the company an "overweight" rating in a research report on Friday, September 4th. Thirty-four equities research analysts have rated the stock with a Buy rating, six have issued a Hold rating and two have issued a Sell rating to the company's stock. According to data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and an average target price of $216.53.

Zscaler Trading Up 1.1%

Shares of ZS opened at $193.89 on Wednesday. The stock has a fifty day moving average of $165.10 and a two-hundred day moving average of $150.97. The company has a debt-to-equity ratio of 0.65, a quick ratio of 1.70 and a current ratio of 1.70. The company has a market capitalization of $31.61 billion, a PE ratio of -497.15, a price-to-earnings-growth ratio of 23.07 and a beta of 0.95. Zscaler, Inc. has a fifty-two week low of $114.63 and a fifty-two week high of $336.99.

Zscaler (NASDAQ:ZS - Get Free Report) last issued its quarterly earnings results on Thursday, September 3rd. The company reported $1.19 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.09 by $0.10. The firm had revenue of $898.19 million for the quarter, compared to analyst estimates of $876.96 million. Zscaler had a positive return on equity of 1.23% and a negative net margin of 1.88%.The firm's quarterly revenue was up 24.9% on a year-over-year basis. During the same period last year, the company earned $0.89 EPS. Zscaler has set its FY 2027 guidance at 4.860-4.900 EPS and its Q1 2027 guidance at 1.150-1.160 EPS. As a group, analysts forecast that Zscaler, Inc. will post 0.61 EPS for the current year.

About Zscaler

Zscaler, Inc is a cloud-native cybersecurity company that provides security services designed to help organizations connect users, devices, applications and workloads securely over the internet. Its platform is built around a zero-trust security model, which verifies access based on identity, context and policy rather than relying primarily on a traditional corporate network perimeter.

The company's offerings include Zscaler Internet Access, which secures access to internet and software-as-a-service applications, and Zscaler Private Access, which provides secure, policy-based access to private applications without requiring conventional virtual private networks.

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