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

Key Points

• Wedbush cut its price target on Zscaler from $300 to $220 while keeping an outperform rating, signaling a more cautious stance despite still seeing upside from current levels.
• Analyst sentiment remains broadly positive, with Zscaler carrying an average Moderate Buy rating and a consensus target price of about $229.36, even as several firms trimmed their targets.
• Recent earnings were strong: Zscaler beat estimates on both EPS and revenue, and management raised FY26 guidance, but the stock is facing pressure from valuation concerns, competition, and softer revenue outlook commentary.

Zscaler (NASDAQ:ZS - Get Free Report) had its target price dropped by investment analysts at Wedbush from $300.00 to $220.00 in a research note issued to investors on Wednesday,MarketScreener reports. The brokerage presently has an "outperform" rating on the stock. Wedbush's target price indicates a potential upside of 63.28% from the stock's previous close.

Several other research analysts also recently weighed in on the company. Scotiabank dropped their target price on Zscaler from $190.00 to $175.00 and set a "sector outperform" rating on the stock in a research note on Wednesday. HC Wainwright raised Zscaler from a "buy" rating to a "buy" rating in a report on Monday, May 18th. Royal Bank Of Canada reaffirmed an "outperform" rating on shares of Zscaler in a report on Wednesday. B. Riley Financial decreased their price target on Zscaler from $225.00 to $215.00 and set a "buy" rating for the company in a report on Wednesday. Finally, Evercore set a $155.00 price objective on shares of Zscaler in a research note on Wednesday. Two research analysts have rated the stock with a Strong Buy rating, thirty have given a Buy rating, seven have assigned a Hold rating and three have assigned a Sell rating to the stock. Based on data from MarketBeat, Zscaler has an average rating of "Moderate Buy" and an average target price of $229.36.

Zscaler Price Performance

ZS opened at $134.74 on Wednesday. The firm has a market capitalization of $21.66 billion, a PE ratio of -318.90 and a beta of 0.96. The company has a debt-to-equity ratio of 0.78, a current ratio of 1.90 and a quick ratio of 1.90. The business's 50-day moving average is $145.75 and its two-hundred day moving average is $192.65. Zscaler has a 1 year low of $114.63 and a 1 year high of $336.99.

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

Insider Activity at Zscaler

In other news, CFO Kevin Rubin sold 1,682 shares of Zscaler stock in a transaction that occurred on Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total value of $263,384.38. Following the transaction, the chief financial officer owned 46,479 shares of the company's stock, valued at $7,278,146.61. The trade was a 3.49% decrease in their position. The sale was disclosed in a document filed with the SEC, which is accessible through this link. Also, Director James A. Beer sold 177 shares of the stock in a transaction that occurred on Wednesday, March 18th. The shares were sold at an average price of $153.53, for a total transaction of $27,174.81. Following the sale, the director directly owned 4,384 shares of the company's stock, valued at approximately $673,075.52. This represents a 3.88% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders sold 12,130 shares of company stock valued at $1,892,487 in the last ninety days. 17.20% of the stock is owned by insiders.

Hedge Funds Weigh In On Zscaler

A number of institutional investors have recently bought and sold shares of ZS. Front Row Advisors LLC lifted its stake in Zscaler by 24.1% during the first quarter. Front Row Advisors LLC now owns 809 shares of the company's stock valued at $113,000 after buying an additional 157 shares in the last quarter. Western Wealth Management LLC purchased a new stake in shares of Zscaler in the 1st quarter valued at approximately $33,000. Bank of America Corp DE boosted its stake in Zscaler by 44.3% in the 1st quarter. Bank of America Corp DE now owns 779,245 shares of the company's stock worth $109,320,000 after purchasing an additional 239,326 shares during the period. Edgestream Partners L.P. grew its position in Zscaler by 95.9% during the 1st quarter. Edgestream Partners L.P. now owns 1,992 shares of the company's stock worth $279,000 after purchasing an additional 975 shares in the last quarter. Finally, Janus Henderson Group PLC raised its stake in Zscaler by 47.0% during the 1st quarter. Janus Henderson Group PLC now owns 541,671 shares of the company's stock valued at $76,005,000 after purchasing an additional 173,268 shares during the period. Hedge funds and other institutional investors own 46.45% of the company's stock.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler reported fiscal Q3 revenue of $850.5 million and EPS of $1.08, both above estimates, while revenue rose 25% year over year and ARR also grew 25%, reinforcing the company’s strong core demand. Article: Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: Management raised FY26 guidance and pointed to strength in AI security and record margins, which supports the long-term growth narrative for the cybersecurity platform. Article: ZS Q3 Earnings Call Flags Prudent Growth Outlook
• Positive Sentiment: Several analysts still view the stock favorably despite trimming targets, with Rosenblatt, Bernstein, Baird, and Needham maintaining bullish or buy-equivalent ratings, suggesting Wall Street still sees upside from current levels. Article: Analyst target updates
• Neutral Sentiment: New commentary on Zscaler’s AI security strategy and product expansion adds to the growth story, but also notes the stock may still need stronger execution to justify its valuation. Article: As Zscaler Doubles Down on AI Security, ZS Stock Still Needs More to Justify Its Steep Valuation
• Negative Sentiment: Despite the beat, Zscaler’s guidance disappointed traders: the company forecast fourth-quarter revenue slightly below estimates, and Reuters said the outlook reflected intensifying competition in cybersecurity and more cautious enterprise spending. Article: Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Some recent analyst notes turned more cautious, including a Seeking Alpha downgrade citing slowing organic growth, weaker net-new ARR momentum, and competitive pressure from integrated security platforms. Article: Zscaler Q1: I Was Right (Rating Downgrade)

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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