Sanford C. Bernstein Has Lowered Expectations for Zscaler (NASDAQ:ZS) Stock Price

Key Points

• Sanford C. Bernstein trimmed its price target on Zscaler from $228 to $224, while keeping an outperform rating. The new target still implies about 21% upside from the prior close.
• Zscaler’s latest quarter topped expectations, with EPS of $1.08 and revenue of $850.5 million, up 25.4% year over year. The company also raised its FY 2026 EPS guidance, signaling continued confidence in profitability.
• Despite strong results, sentiment is being pressured by weaker near-term revenue guidance and rising competition in cybersecurity. Several analysts have recently cut price targets, and the stock’s consensus rating remains only Moderate Buy.

Zscaler (NASDAQ:ZS - Get Free Report) had its price target cut by investment analysts at Sanford C. Bernstein from $228.00 to $224.00 in a research report issued to clients and investors on Wednesday, MarketBeat Ratings reports. The firm currently has an "outperform" rating on the stock. Sanford C. Bernstein's price target suggests a potential upside of 21.34% from the stock's previous close.

Other analysts also recently issued research reports about the stock. Berenberg Bank reduced their price objective on shares of Zscaler from $390.00 to $320.00 and set a "buy" rating for the company in a research report on Friday, February 27th. Canaccord Genuity Group reduced their price objective on shares of Zscaler from $340.00 to $275.00 and set a "buy" rating for the company in a research report on Friday, February 27th. Citigroup downgraded shares of Zscaler from a "buy" rating to a "neutral" rating in a research report on Monday, May 18th. JPMorgan Chase & Co. reduced their price objective on shares of Zscaler from $354.00 to $267.00 and set an "overweight" rating for the company in a research report on Friday, February 20th. Finally, Barclays set a $220.00 price objective on shares of Zscaler in a research report on Thursday, February 19th. Two equities research analysts have rated the stock with a Strong Buy rating, twenty-nine have given a Buy rating, seven have issued a Hold rating and three have assigned a Sell rating to the company. According to MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average target price of $245.80.

Zscaler Trading Up 1.2%

NASDAQ ZS opened at $184.60 on Wednesday. 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 has a 52 week low of $114.63 and a 52 week high of $336.99. The stock has a market capitalization of $29.68 billion, a PE ratio of -439.52 and a beta of 0.96. The firm has a 50 day moving average of $145.75 and a two-hundred day moving average of $192.65.

Zscaler (NASDAQ:ZS - Get Free Report) last posted its quarterly earnings results on Tuesday, May 26th. The company reported $1.08 EPS for the quarter, topping the consensus estimate of $1.01 by $0.07. The company had revenue of $850.48 million during the quarter, compared to analysts' expectations of $835.60 million. Zscaler had a negative net margin of 2.25% and a positive return on equity of 0.06%. The firm's revenue was up 25.4% on a year-over-year basis. During the same quarter in the previous year, the business 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. As a group, research analysts expect that Zscaler will post -0.03 EPS for the current fiscal year.

Insider Activity at Zscaler

In other news, EVP Raj Judge sold 2,488 shares of the stock in a transaction dated Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total value of $389,595.92. Following the completion of the transaction, the executive vice president owned 67,906 shares in the company, valued at $10,633,400.54. This trade represents a 3.53% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, insider Robert Schlossman sold 2,263 shares of the stock in a transaction dated Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total transaction of $354,363.17. Following the completion of the sale, the insider directly owned 72,390 shares in the company, valued at approximately $11,335,550.10. The trade was a 3.03% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders have sold 12,130 shares of company stock worth $1,892,487 in the last 90 days. Corporate insiders own 17.20% of the company's stock.

Institutional Investors Weigh In On Zscaler

Several hedge funds have recently modified their holdings of ZS. Groupama Asset Managment boosted its stake in shares of Zscaler by 76,352.6% during the 3rd quarter. Groupama Asset Managment now owns 4,750,000 shares of the company's stock worth $1,423,385,000 after purchasing an additional 4,743,787 shares during the last quarter. First Trust Advisors LP boosted its stake in shares of Zscaler by 36.2% during the 1st quarter. First Trust Advisors LP now owns 3,518,678 shares of the company's stock worth $493,635,000 after purchasing an additional 935,781 shares during the last quarter. Price T Rowe Associates Inc. MD boosted its stake in shares of Zscaler by 43.3% during the 4th quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company's stock worth $578,576,000 after purchasing an additional 777,414 shares during the last quarter. AQR Capital Management LLC boosted its stake in shares of Zscaler by 61.8% during the 3rd quarter. AQR Capital Management LLC now owns 1,941,571 shares of the company's stock worth $576,083,000 after purchasing an additional 741,756 shares during the last quarter. Finally, Pictet Asset Management Holding SA boosted its stake in shares of Zscaler by 52.5% during the 1st quarter. Pictet Asset Management Holding SA now owns 1,920,540 shares of the company's stock worth $269,285,000 after purchasing an additional 661,413 shares during the last quarter. 46.45% of the stock is owned by institutional investors and hedge funds.

Key Stories Impacting Zscaler

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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