FirstWave Capital Management LLC Makes New Investment in Zscaler, Inc. $ZS

Key Points

• FirstWave Capital Management initiated a 13,351-share position in Zscaler worth approximately $1.88 million during the second quarter. Institutional investors and hedge funds collectively own 46.45% of the company.
• Zscaler exceeded quarterly expectations with adjusted EPS of $1.19 versus $1.09 expected and revenue of $898.2 million, up 24.9% year over year. However, management’s fiscal 2027 outlook implies growth will slow substantially from approximately 25% to about 17%.
• Analysts remain broadly positive, with a consensus “Moderate Buy” rating and average price target of $217.08, although insiders sold 16,772 shares worth roughly $2.14 million over the past three months.

FirstWave Capital Management LLC purchased a new position in Zscaler, Inc. (NASDAQ:ZS - Free Report) during the second quarter, according to its most recent 13F filing with the Securities and Exchange Commission. The firm purchased 13,351 shares of the company's stock, valued at approximately $1,884,000.

Other hedge funds and other institutional investors have also modified their holdings of the company. Integrated Wealth Concepts LLC raised its stake in Zscaler by 19.9% during the first quarter. Integrated Wealth Concepts LLC now owns 1,439 shares of the company's stock worth $285,000 after acquiring an additional 239 shares during the period. NewEdge Advisors LLC boosted its stake in Zscaler by 8.2% in the first quarter. NewEdge Advisors LLC now owns 4,899 shares of the company's stock valued at $972,000 after acquiring an additional 370 shares during the period. Empowered Funds LLC boosted its stake in Zscaler by 9.2% in the first quarter. Empowered Funds LLC now owns 2,811 shares of the company's stock valued at $558,000 after acquiring an additional 238 shares during the period. Sivia Capital Partners LLC bought a new position in shares of Zscaler during the second quarter valued at approximately $252,000. Finally, Jump Financial LLC acquired a new stake in shares of Zscaler during the 2nd quarter worth approximately $3,019,000. 46.45% of the stock is owned by institutional investors and hedge funds.

Insider Buying and Selling at Zscaler

In related news, insider Adam Geller sold 2,817 shares of Zscaler stock in a transaction on Monday, June 22nd. The stock was sold at an average price of $122.60, for a total value of $345,364.20. Following the transaction, the insider directly owned 42,314 shares in the company, valued at $5,187,696.40. The trade was a 6.24% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available through this link. 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 on Tuesday, August 25th. The shares were sold at an average price of $173.38, for a total value of $87,210.14. Following the sale, the chief financial officer directly owned 40,895 shares of the company's stock, valued at approximately $7,090,375.10. This represents a 1.22% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 16,772 shares of company stock valued at $2,139,799. 17.20% of the stock is currently owned by corporate insiders.

Zscaler Trading Down 4.5%

Shares of Zscaler stock opened at $169.80 on Friday. The business has a fifty day simple moving average of $161.26 and a 200-day simple moving average of $150.53. Zscaler, Inc. has a fifty-two week low of $114.63 and a fifty-two week high of $336.99. The firm has a market cap of $27.46 billion, a price-to-earnings ratio of -435.38, a price-to-earnings-growth ratio of 104.65 and a beta of 0.95. The company has a quick ratio of 1.86, a current ratio of 1.86 and a debt-to-equity ratio of 0.72.

Zscaler (NASDAQ:ZS - Get Free Report) last issued its quarterly earnings results on Thursday, September 3rd. The company reported $1.19 EPS for the quarter, topping the consensus estimate of $1.09 by $0.10. Zscaler had a negative net margin of 1.88% and a positive return on equity of 1.29%. The firm had revenue of $898.19 million for the quarter, compared to analysts' expectations of $876.96 million. During the same period in the previous year, the business earned $0.89 earnings per share. Zscaler's revenue for the quarter was up 24.9% compared to the same quarter last year. Zscaler has set its FY 2027 guidance at 4.860-4.900 EPS and its Q1 2027 guidance at 1.150-1.160 EPS. On average, equities analysts forecast that Zscaler, Inc. will post 0.13 EPS for the current fiscal year.

Analysts Set New Price Targets

ZS has been the topic of several recent research reports. BMO Capital Markets raised their price target on Zscaler from $178.00 to $200.00 and gave the stock an "outperform" rating in a report on Friday. Jefferies Financial Group reaffirmed a "buy" rating and issued a $220.00 target price on shares of Zscaler in a research report on Wednesday. Weiss Ratings upgraded Zscaler from a "sell (e+)" rating to a "sell (d-)" rating in a research note on Thursday, August 27th. Truist Financial set a $210.00 price target on shares of Zscaler in a report on Wednesday, May 27th. Finally, Zacks Research raised shares of Zscaler from a "strong sell" rating to a "hold" rating in a report on Wednesday, May 27th. Thirty-four equities research analysts have rated the stock with a Buy rating, six have given a Hold rating and one has given a Sell rating to the stock. According to MarketBeat.com, the company has a consensus rating of "Moderate Buy" and an average target price of $217.08.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Strong fiscal fourth-quarter results: Zscaler reported adjusted EPS of $1.19 versus the $1.09 consensus and revenue of $898.2 million versus $877.0 million expected. Revenue and annual recurring revenue (ARR) each increased 25% year over year, while non-GAAP operating margin reached a record 24%. Zscaler Announces Strong Fourth Quarter and Fiscal 2026 Financial Results
• Positive Sentiment: AI and platform demand remain catalysts: Management highlighted growing demand for Security for AI, Agentic SecOps, non-seat-based products and large enterprise deals. Analysts including Baird, Stephens, Needham, Canaccord and Cantor raised price targets, generally citing the earnings beat and potential for conservative guidance to be exceeded. Zscaler Analysts Boost Their Forecasts After Better-Than-Expected Q4 Earnings
• Neutral Sentiment: Analyst opinion is divided: Some analysts called the fiscal 2027 outlook overly cautious and maintained bullish ratings, while others noted that the forecast reflects competitive pressure, the Red Canary acquisition and a more measured growth profile.
• Negative Sentiment: Fiscal 2027 growth is expected to decelerate: Zscaler guided for revenue growth of 16.6% to 17.5% and ARR growth of 16.6% to 17.4%, well below the 25% growth delivered in fiscal 2026. The slower outlook overshadowed the quarterly beat and renewed valuation concerns for high-growth cybersecurity stocks. Zscaler Fiscal 2027 Growth Forecast
• Negative Sentiment: Free cash flow weakened sharply: Fourth-quarter free cash flow fell 65% year over year to $60.8 million, versus approximately $66.9 million expected, as capital expenditures and internal-use software spending increased. Zscaler also announced a restructuring affecting about 3% of its workforce, adding execution concerns. Zscaler Shares Fall Despite Earnings Beat

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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