Wedbush Reiterates "Outperform" Rating for Zscaler (NASDAQ:ZS)

Key Points

• Wedbush reiterated an “Outperform” rating on Zscaler and set a $220 price target, implying about 71.9% upside from the stock’s current price.
• Zscaler reported better-than-expected quarterly results, with EPS of $1.08 topping estimates and revenue of $850.5 million beating forecasts; revenue also rose 25.4% year over year.
• Despite positive analyst sentiment, the stock has faced pressure from recent insider selling and broader investor concerns tied to stock drops and securities-investigation chatter.

Zscaler (NASDAQ:ZS - Get Free Report)'s stock had its "outperform" rating reissued by equities research analysts at Wedbush in a note issued to investors on Wednesday,Benzinga reports. They presently have a $220.00 price target on the stock. Wedbush's price target indicates a potential upside of 71.88% from the company's current price.

A number of other equities research analysts have also issued reports on the stock. Sanford C. Bernstein reduced their target price on shares of Zscaler from $228.00 to $224.00 and set an "outperform" rating on the stock in a report on Wednesday, May 27th. Zacks Research raised Zscaler from a "strong sell" rating to a "hold" rating in a research report on Wednesday, May 27th. B. Riley Financial decreased their target price on Zscaler from $225.00 to $215.00 and set a "buy" rating for the company in a report on Wednesday, May 27th. Deutsche Bank Aktiengesellschaft cut their price target on Zscaler from $185.00 to $175.00 and set a "buy" rating on the stock in a report on Wednesday, May 27th. Finally, Oppenheimer reduced their price target on Zscaler from $280.00 to $250.00 and set an "outperform" rating on the stock in a research report on Tuesday, March 10th. Thirty-three equities research analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, the company currently has a consensus rating of "Moderate Buy" and a consensus price target of $216.03.

Zscaler Trading Up 1.7%

NASDAQ ZS traded up $2.16 during trading on Wednesday, hitting $128.00. The stock had a trading volume of 666,730 shares, compared to its average volume of 3,569,907. The company has a quick ratio of 1.86, a current ratio of 1.86 and a debt-to-equity ratio of 0.72. The company has a market capitalization of $20.70 billion, a PE ratio of -266.18, a PEG ratio of 80.81 and a beta of 0.97. The firm has a 50 day moving average price of $143.22 and a 200 day moving average price of $180.32. Zscaler has a twelve month low of $114.63 and a twelve month high of $336.99.

Zscaler (NASDAQ:ZS - Get Free Report) last issued its quarterly earnings results on Tuesday, May 26th. The company reported $1.08 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.01 by $0.07. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.37%. The business had revenue of $850.48 million for the quarter, compared to analysts' expectations of $835.14 million. During the same quarter in the prior year, the company earned $0.84 earnings per share. The business'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. As a group, equities research analysts forecast that Zscaler will post 0.11 earnings per share for the current year.

Insider Activity at Zscaler

In other news, CEO Jagtar Singh Chaudhry sold 1,941 shares of the firm's stock in a transaction that occurred on Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total transaction of $303,941.19. Following the transaction, the chief executive officer directly owned 345,916 shares in the company, valued at approximately $54,166,986.44. This trade represents a 0.56% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is accessible through this link. Also, EVP Raj Judge sold 2,488 shares of the firm's stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total transaction of $389,595.92. Following the transaction, the executive vice president owned 67,906 shares in the company, valued at approximately $10,633,400.54. This trade represents a 3.53% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders have sold a total of 12,130 shares of company stock valued at $1,892,487 over the last 90 days. 17.20% of the stock is owned by insiders.

Institutional Trading of Zscaler

A number of large investors have recently bought and sold shares of ZS. Binnacle Investments Inc purchased a new position in Zscaler during the 3rd quarter worth $25,000. Picton Mahoney Asset Management purchased a new stake in shares of Zscaler in the third quarter valued at about $30,000. AlphaCentric Advisors LLC acquired a new stake in shares of Zscaler during the fourth quarter worth about $29,000. University of Texas Texas AM Investment Management Co. acquired a new stake in shares of Zscaler during the fourth quarter worth about $30,000. Finally, Mcguire Capital Advisors Inc. purchased a new position in shares of Zscaler during the fourth quarter worth about $32,000. Institutional investors and hedge funds own 46.45% of the company's stock.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Rosenblatt Securities reaffirmed its Buy rating and set a $200 price target on Zscaler, implying meaningful upside from current levels. Rosenblatt reaffirms Buy on Zscaler
• Positive Sentiment: Needham also reiterated a Buy rating with a $180 price target, reinforcing Wall Street confidence in Zscaler’s growth outlook. Needham reaffirms Buy on Zscaler
• Positive Sentiment: Zscaler unveiled major AI-security and zero-trust product expansions, including ZAgent Framework, AI Broker, Endpoint AI Security, and AI Access Graph, which positions the company as an early leader in securing agentic AI workloads. Zscaler Redefines Zero Trust SASE for the AI Era
• Positive Sentiment: The company expanded Project AI-Guardian with partners like AWS, Google Cloud, OpenAI, Databricks, and others, suggesting broader ecosystem adoption and more AI-related use cases for its platform. Zscaler Expands AI-Guardian Uniting Tech Giants to Secure Enterprise AI at Scale
• Neutral Sentiment: Management highlighted research showing cybercriminals are using AI to create more targeted phishing attacks, which supports the demand case for Zscaler’s security tools but does not directly change near-term financials. Zscaler Research Finds Cybercrime Economics Are Shifting as AI Trades Mass Volume for Lethal Precision
• Negative Sentiment: Investor concern remains elevated after reports of a stock crash and securities investigation/class-action activity, which can pressure sentiment even when fundamentals and product news are improving. Zscaler's Stock Lost 31% in One Day. Now Securities Lawyers Are Circling.
• Negative Sentiment: Additional law-firm notices about a possible fraud/securities investigation add legal uncertainty and can weigh on the stock until clarified. ZS Investors Have Opportunity to Join Zscaler, Inc. Fraud Investigation with the Schall Law Firm

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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