Zscaler (NASDAQ:ZS) Shares Down 5.6% - Should You Sell?

Key Points

• Zscaler shares fell 5.6% to about $160.23, though the stock remains above its 200-day moving average of $150.32.
• Analysts remain broadly bullish, with a “Moderate Buy” consensus from 34 Buy, six Hold and two Sell ratings, and an average price target of $215.90.
• The company exceeded quarterly earnings and revenue expectations, reporting $1.19 in EPS and $898.19 million in revenue, up 24.9% year over year; insiders have sold shares primarily to cover tax obligations.

Zscaler, Inc. (NASDAQ:ZS - Get Free Report)'s stock price fell 5.6% on Tuesday . The stock traded as low as $159.75 and last traded at $160.23. 718,379 shares traded hands during mid-day trading, a decline of 79% from the average daily volume of 3,358,175 shares. The stock had previously closed at $169.80.

Analyst Upgrades and Downgrades

Several research analysts have commented on the stock. 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 report on Friday. Wedbush reaffirmed an "outperform" rating and set a $220.00 price objective on shares of Zscaler in a research report on Wednesday, June 10th. Scotiabank reiterated an "outperform" rating on shares of Zscaler in a research note on Friday. BMO Capital Markets increased their target price on Zscaler from $178.00 to $200.00 and gave the company an "outperform" rating in a report on Friday. Finally, JPMorgan Chase & Co. raised their price target on Zscaler from $205.00 to $215.00 and gave the company an "overweight" rating in a research note on Wednesday, August 26th. Thirty-four equities research analysts have rated the stock with a Buy rating, six have given a Hold rating and two have assigned a Sell rating to the company's stock. According to data from MarketBeat, Zscaler presently has a consensus rating of "Moderate Buy" and an average target price of $215.90.

Zscaler Stock Down 5.2%

The business has a 50 day moving average of $161.91 and a 200-day moving average of $150.32. The stock has a market cap of $26.24 billion, a PE ratio of -412.10, a P/E/G ratio of 99.94 and a beta of 0.95. The company has a current ratio of 1.70, a quick ratio of 1.70 and a debt-to-equity ratio of 0.65.

Zscaler (NASDAQ:ZS - Get Free Report) last issued its quarterly earnings data on Thursday, September 3rd. The company reported $1.19 earnings per share for the quarter, beating analysts' consensus estimates of $1.09 by $0.10. The company had revenue of $898.19 million during the quarter, compared to analysts' expectations 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 revenue for the quarter was up 24.9% on a year-over-year basis. During the same quarter in the previous year, the business earned $0.89 earnings per share. Zscaler has set its FY 2027 guidance at 4.860-4.900 EPS and its Q1 2027 guidance at 1.150-1.160 EPS. Equities research analysts predict that Zscaler, Inc. will post 0.13 EPS for the current fiscal year.

Insider Buying and Selling at Zscaler

In related news, CEO Jagtar Chaudhry sold 2,878 shares of the company's stock in a transaction on Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total value of $363,865.54. Following the completion of the sale, the chief executive officer owned 343,038 shares in the company, valued at $43,370,294.34. This represents a 0.83% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Robert Schlossman sold 3,146 shares of the stock in a transaction on Tuesday, June 16th. The stock was sold at an average price of $126.43, for a total transaction of $397,748.78. Following the sale, the insider owned 69,366 shares of the company's stock, valued at approximately $8,769,943.38. This represents a 4.34% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last quarter, insiders sold 16,772 shares of company stock valued at $2,139,799. Insiders own 17.20% of the company's stock.

Hedge Funds Weigh In On Zscaler

A number of hedge funds and other institutional investors have recently made changes to their positions in ZS. Parkside Financial Bank & Trust raised its stake in Zscaler by 18.8% during the 2nd quarter. Parkside Financial Bank & Trust now owns 417 shares of the company's stock valued at $59,000 after acquiring an additional 66 shares during the last quarter. Amundi grew its stake in shares of Zscaler by 12.8% in the 2nd quarter. Amundi now owns 1,137,837 shares of the company's stock valued at $160,606,000 after purchasing an additional 129,563 shares during the last quarter. VIRGINIA RETIREMENT SYSTEMS ET Al acquired a new position in shares of Zscaler in the second quarter valued at approximately $3,588,000. California State Teachers Retirement System raised its stake in shares of Zscaler by 13,837.9% during the second quarter. California State Teachers Retirement System now owns 19,388,787 shares of the company's stock worth $2,736,727,000 after purchasing an additional 19,249,679 shares during the last quarter. Finally, POM Investment Strategies LLC raised its stake in shares of Zscaler by 92.9% during the second quarter. POM Investment Strategies LLC now owns 218 shares of the company's stock worth $31,000 after purchasing an additional 105 shares during the last quarter. Hedge funds and other institutional investors own 46.45% of the company's stock.

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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