Zscaler (NASDAQ:ZS) Cut to "Strong Sell" at Zacks Research

Key Points

• Zacks Research downgraded Zscaler from a "hold" to a "strong sell" in a recent note to investors.
• Several major analysts have cut price targets (e.g., Oppenheimer, Baird, KeyCorp, JPMorgan) yet the consensus remains a Moderate Buy with an average target of $265.74 while the stock trades near $130.
• Zscaler beat quarterly revenue and EPS estimates but still shows a negative net margin; insiders have sold shares recently and institutional investors own roughly 46% of the company.

Zscaler (NASDAQ:ZS - Get Free Report) was downgraded by Zacks Research from a "hold" rating to a "strong sell" rating in a research note issued to investors on Wednesday,Zacks.com reports.

Other equities analysts also recently issued research reports about the company. Oppenheimer decreased their target price on Zscaler from $280.00 to $250.00 and set an "outperform" rating on the stock in a research report on Tuesday, March 10th. Robert W. Baird decreased their target price on Zscaler from $360.00 to $300.00 and set an "outperform" rating on the stock in a research report on Monday, February 23rd. KeyCorp decreased their target price on Zscaler from $220.00 to $160.00 and set an "overweight" rating on the stock in a research report on Wednesday, April 15th. BTIG Research restated a "neutral" rating on shares of Zscaler in a research report on Thursday, April 9th. Finally, JPMorgan Chase & Co. decreased their target price on Zscaler from $354.00 to $267.00 and set an "overweight" rating on the stock in a research report on Friday, February 20th. Two analysts have rated the stock with a Strong Buy rating, twenty-nine have issued a Buy rating, eight have given a Hold rating and two have assigned a Sell rating to the stock. According to MarketBeat, the company presently has an average rating of "Moderate Buy" and an average target price of $265.74.

Zscaler Stock Performance

Shares of ZS stock opened at $130.68 on Wednesday. The company has a market capitalization of $21.01 billion, a P/E ratio of -311.14 and a beta of 1.12. The business's 50 day moving average is $143.64 and its two-hundred day moving average is $211.56. The company has a current ratio of 1.90, a quick ratio of 1.90 and a debt-to-equity ratio of 0.78. Zscaler has a 12-month low of $114.63 and a 12-month high of $336.99.

Zscaler (NASDAQ:ZS - Get Free Report) last released its earnings results on Thursday, February 26th. The company reported $1.01 earnings per share for the quarter, beating the consensus estimate of $0.89 by $0.12. The business had revenue of $815.75 million for the quarter, compared to the consensus estimate of $798.92 million. Zscaler had a positive return on equity of 0.06% and a negative net margin of 2.25%.The business's quarterly revenue was up 25.9% compared to the same quarter last year. During the same quarter last year, the business posted $0.78 earnings per share. Zscaler has set its Q3 2026 guidance at 1.000-1.010 EPS and its FY 2026 guidance at 3.990-4.020 EPS. Analysts expect that Zscaler will post -0.03 EPS for the current fiscal year.

Insider Transactions at Zscaler

In related news, Director James A. Beer sold 177 shares of the stock in a transaction that occurred on Wednesday, March 18th. The stock was sold at an average price of $153.53, for a total value of $27,174.81. Following the completion of the sale, the director owned 4,384 shares of the company's stock, valued at approximately $673,075.52. This trade represents a 3.88% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, insider Robert Schlossman sold 2,263 shares of the 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 $354,363.17. Following the completion of the sale, the insider directly owned 72,390 shares of the company's stock, valued at approximately $11,335,550.10. This represents a 3.03% decrease in their position. The SEC filing for this sale provides additional information. In the last 90 days, insiders have sold 12,130 shares of company stock valued at $1,892,487. 17.20% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Zscaler

Several hedge funds and other institutional investors have recently made changes to their positions in ZS. Groupama Asset Managment increased its holdings in shares of Zscaler by 76,352.6% in the third quarter. Groupama Asset Managment now owns 4,750,000 shares of the company's stock valued at $1,423,385,000 after purchasing an additional 4,743,787 shares during the last quarter. Price T Rowe Associates Inc. MD increased its stake in Zscaler by 43.3% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company's stock worth $578,576,000 after acquiring an additional 777,414 shares during the last quarter. AQR Capital Management LLC increased its stake in Zscaler by 61.8% during the third quarter. AQR Capital Management LLC now owns 1,941,571 shares of the company's stock worth $576,083,000 after acquiring an additional 741,756 shares during the last quarter. Pictet Asset Management Holding SA increased its stake in Zscaler by 52.5% during the first quarter. Pictet Asset Management Holding SA now owns 1,920,540 shares of the company's stock worth $269,285,000 after acquiring an additional 661,413 shares during the last quarter. Finally, Vanguard Group Inc. increased its stake in Zscaler by 6.1% during the third quarter. Vanguard Group Inc. now owns 11,367,903 shares of the company's stock worth $3,406,506,000 after acquiring an additional 652,771 shares during the last quarter. Institutional investors and hedge funds own 46.45% of the company's stock.

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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