Zscaler (NASDAQ:ZS) Rating Increased to Hold at Zacks Research

Key Points

• Zacks Research upgraded Zscaler from a “strong sell” to a “hold,” while other analysts remained more constructive, leaving the stock with a consensus rating of Moderate Buy and an average target price of $216.08.
• Zscaler reported quarterly results that beat expectations, with EPS of $1.08 and revenue of $850.48 million, both above estimates, and revenue rose 25.4% year over year.
• Despite the strong quarter, the stock traded around $130.04 and investors are watching for risks tied to cautious guidance, leadership changes in sales, and recent insider selling.

Zscaler (NASDAQ:ZS - Get Free Report) was upgraded by investment analysts at Zacks Research from a "strong sell" rating to a "hold" rating in a report issued on Wednesday,Zacks.com reports.

Several other research analysts have also issued reports on the company. Guggenheim reiterated a "neutral" rating on shares of Zscaler in a report on Wednesday. Citigroup reiterated a "market outperform" rating on shares of Zscaler in a report on Wednesday. Sanford C. Bernstein cut their price target on Zscaler from $228.00 to $224.00 and set an "outperform" rating on the stock in a report on Wednesday. BMO Capital Markets cut their price target on Zscaler from $210.00 to $178.00 and set an "outperform" rating on the stock in a report on Wednesday. Finally, Berenberg Bank set a $200.00 price target on Zscaler in a report on Thursday. Thirty-two investment analysts have rated the stock with a Buy rating, eight have issued a Hold rating and one has issued a Sell rating to the company's stock. Based on data from MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and a consensus target price of $216.08.

Zscaler Stock Up 2.9%

Shares of Zscaler stock opened at $130.04 on Wednesday. Zscaler has a one year low of $114.63 and a one year high of $336.99. The company has a debt-to-equity ratio of 0.72, a current ratio of 1.86 and a quick ratio of 1.90. The stock's 50-day moving average is $144.69 and its 200 day moving average is $189.97. The firm has a market cap of $21.03 billion, a price-to-earnings ratio of -270.91 and a beta of 0.96.

Zscaler (NASDAQ:ZS - Get Free Report) last announced its 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 return on equity of 0.37% and a negative net margin of 2.44%.The company had revenue of $850.48 million for the quarter, compared to analyst estimates of $835.14 million. During the same quarter in the prior year, the company earned $0.84 EPS. The firm's revenue for the quarter was up 25.4% compared to the same quarter last year. Zscaler has set its Q4 2026 guidance at 1.080-1.090 EPS and its FY 2026 guidance at 4.100-4.110 EPS. Equities research analysts anticipate that Zscaler will post -0.03 EPS for the current year.

Insider Transactions at Zscaler

In other news, insider Robert Schlossman sold 2,263 shares of the stock in a transaction that occurred on Tuesday, March 17th. The stock was 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 $11,335,550.10. This represents a 3.03% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, 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 directly 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 SEC filing for this sale provides additional information. Over the last quarter, insiders sold 12,130 shares of company stock valued at $1,892,487. Corporate insiders own 17.20% of the company's stock.

Institutional Trading of Zscaler

A number of hedge funds have recently bought and sold shares of the business. Front Row Advisors LLC lifted its holdings in Zscaler by 24.1% during the first quarter. Front Row Advisors LLC now owns 809 shares of the company's stock worth $113,000 after acquiring an additional 157 shares during the period. Western Wealth Management LLC bought a new stake in Zscaler during the first quarter worth $33,000. Bank of America Corp DE lifted its holdings in Zscaler by 44.3% during the first quarter. Bank of America Corp DE now owns 779,245 shares of the company's stock worth $109,320,000 after acquiring an additional 239,326 shares during the period. Edgestream Partners L.P. lifted its holdings in Zscaler by 95.9% during the first quarter. Edgestream Partners L.P. now owns 1,992 shares of the company's stock worth $279,000 after acquiring an additional 975 shares during the period. Finally, Janus Henderson Group PLC lifted its holdings in Zscaler by 47.0% during the first quarter. Janus Henderson Group PLC now owns 541,671 shares of the company's stock worth $76,005,000 after acquiring an additional 173,268 shares during the period. 46.45% of the stock is currently owned by institutional investors.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler beat quarterly expectations, with revenue and earnings topping estimates and annual recurring revenue still growing strongly, which suggests underlying demand remains healthy.
• Positive Sentiment: Several analysts reiterated positive ratings after the report, arguing that strong net retention and Zero Trust demand could support a recovery if execution improves.
• Neutral Sentiment: Multiple law firms announced investigations into possible securities claims after the stock’s decline, adding headline noise but not changing fundamentals directly.
• Negative Sentiment: The company’s cautious forward guidance, especially for revenue growth and customer acquisition, raised concerns that growth may slow more than investors expected.
• Negative Sentiment: Management pointed to sales leadership departures and a transition in the sales organization, which fueled worries about near-term pipeline and execution risk.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.