Zscaler (NASDAQ:ZS) Receives "Neutral" Rating from Guggenheim

Key Points

• Guggenheim reaffirmed its Neutral rating on Zscaler, even as other analysts remain mostly bullish and the stock carries a consensus Moderate Buy rating with an average target price of about $234.91.
• Zscaler’s latest quarter beat expectations, with EPS of $1.08 and revenue of $850.5 million, while sales rose about 25% year over year. The company also raised its FY26 guidance, underscoring continued demand for its cybersecurity platform.
• Despite the strong results, investors remain cautious because the company’s outlook was seen as softer than expected and recent commentary points to intensifying competition and more careful enterprise spending. Shares were trading well below their 52-week high, reflecting pressure on the stock despite growth progress.

Zscaler (NASDAQ:ZS - Get Free Report)'s stock had its "neutral" rating reaffirmed by equities researchers at Guggenheim in a research report issued to clients and investors on Wednesday,Benzinga reports.

ZS has been the topic of several other research reports. Stephens set a $205.00 price target on shares of Zscaler in a report on Wednesday. B. Riley Financial raised shares of Zscaler from a "neutral" rating to a "buy" rating and cut their target price for the company from $275.00 to $225.00 in a research note on Monday, May 18th. Barclays restated an "overweight" rating and set a $170.00 price objective on shares of Zscaler in a research note on Wednesday. Needham & Company LLC restated a "buy" rating and issued a $180.00 price target on shares of Zscaler in a report on Wednesday. Finally, Morgan Stanley set a $145.00 price target on shares of Zscaler in a report on Wednesday. Two investment analysts have rated the stock with a Strong Buy rating, twenty-nine have issued a Buy rating, seven have given a Hold rating and three have issued a Sell rating to the stock. According to data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and an average target price of $234.91.

Zscaler Stock Performance

NASDAQ:ZS opened at $136.97 on Wednesday. The company has a market cap of $22.02 billion, a P/E ratio of -326.75 and a beta of 0.96. The firm's 50 day moving average is $145.75 and its two-hundred day moving average is $192.65. Zscaler has a fifty-two week low of $114.63 and a fifty-two week high of $336.99. 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 (NASDAQ:ZS - Get Free Report) last released its quarterly earnings data on Tuesday, May 26th. The company reported $1.08 EPS for the quarter, topping analysts' consensus estimates of $1.01 by $0.07. Zscaler had a positive return on equity of 0.06% and a negative net margin of 2.25%.The business had revenue of $850.48 million during the quarter, compared to the consensus estimate of $835.60 million. During the same period in the prior year, the firm posted $0.84 EPS. The business's revenue for the quarter 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. Analysts expect that Zscaler will post -0.03 EPS for the current year.

Insider Activity

In other news, CFO Kevin Rubin sold 1,682 shares of the firm's stock in a transaction dated 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 directly owned 46,479 shares in the company, valued at approximately $7,278,146.61. This trade represents a 3.49% decrease in their position. The transaction was disclosed in a filing with the SEC, which can be accessed through the SEC website. Also, insider Adam Geller sold 2,094 shares of the stock in a transaction dated Wednesday, March 18th. The stock was sold at an average price of $153.53, for a total transaction of $321,491.82. Following the sale, the insider owned 46,949 shares in the company, valued at approximately $7,208,079.97. This trade represents a 4.27% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 12,130 shares of company stock valued at $1,892,487 over the last three months. 17.20% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Zscaler

Hedge funds have recently added to or reduced their stakes in the stock. Binnacle Investments Inc bought a new position in shares of Zscaler during the third quarter worth about $25,000. Root Financial Partners LLC acquired a new stake in shares of Zscaler in the third quarter valued at approximately $26,000. AlphaCentric Advisors LLC bought a new stake in shares of Zscaler during the fourth quarter valued at approximately $29,000. Picton Mahoney Asset Management bought a new stake in shares of Zscaler during the third quarter valued at approximately $30,000. Finally, University of Texas Texas AM Investment Management Co. bought a new position in Zscaler in the 4th quarter worth approximately $30,000. 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 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)

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.

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.