Zscaler (NASDAQ:ZS) Sees Large Volume Increase - Time to Buy?

Key Points

• Zscaler posted strong Q3 results, beating expectations on both earnings and revenue, with revenue up about 25% year over year. The company also raised its FY2026 EPS guidance, signaling confidence in profitability.
• The stock sold off sharply after the report because Q4 revenue guidance came in slightly below Wall Street expectations. Investors also worried about sales-team turnover and higher AI-related infrastructure costs.
• Analysts remain generally positive despite lower price targets, with the consensus rating still at Moderate Buy. Many firms cut targets after the update, but the broader long-term thesis appears intact.

Zscaler, Inc. (NASDAQ:ZS - Get Free Report) saw unusually-strong trading volume on Thursday . Approximately 2,370,446 shares traded hands during mid-day trading, a decline of 26% from the previous session's volume of 3,184,495 shares.The stock last traded at $123.5680 and had previously closed at $126.41.

Zscaler News Summary

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Zscaler delivered a Q3 beat, with revenue up about 25% year over year and EPS above expectations, showing continued demand for its cloud security platform. Zscaler Announces Strong Third-Quarter Fiscal 2026 Results
• Positive Sentiment: Management lifted FY2026 EPS guidance, signaling confidence in profitability even as near-term revenue growth slows. Zscaler Q3 Earnings and Revenues Top Estimates
• Neutral Sentiment: Analysts trimmed price targets after the report, but many kept bullish ratings, suggesting the selloff may be more about guidance than a broken long-term thesis. Analyst target updates
• Negative Sentiment: Q4 revenue guidance was slightly below Wall Street expectations, which sparked a sharp selloff and drove the stock lower. Reuters: Zscaler sees downbeat quarterly revenue as competition heats up in cybersecurity market
• Negative Sentiment: Investors also worried about sales-team turnover and rising infrastructure costs tied to AI, which added to concerns about future growth and margins. CNBC: Zscaler tanks 31% for worst day ever on 'prudent' guidance, sales shakeup

Wall Street Analyst Weigh In

Several equities research analysts have commented on ZS shares. The Goldman Sachs Group reaffirmed a "neutral" rating and issued a $179.00 price target on shares of Zscaler in a report on Wednesday. Rosenblatt Securities lowered their price target on shares of Zscaler from $223.00 to $200.00 and set a "buy" rating on the stock in a report on Wednesday. HC Wainwright raised shares of Zscaler from a "buy" rating to a "buy" rating in a report on Monday, May 18th. Canaccord Genuity Group lowered their price target on shares of Zscaler from $275.00 to $210.00 and set a "buy" rating on the stock in a report on Wednesday. Finally, KeyCorp upped their price target on shares of Zscaler from $160.00 to $190.00 and gave the company an "overweight" rating in a report on Monday, May 18th. Thirty-two research analysts have rated the stock with a Buy rating, seven have issued a Hold rating and two have issued a Sell rating to the company's stock. According to data from MarketBeat, Zscaler presently has an average rating of "Moderate Buy" and a consensus target price of $216.08.

Zscaler Stock Performance

The company has a market cap of $20.49 billion, a price-to-earnings ratio of -265.23 and a beta of 0.96. The company has a current ratio of 1.90, a quick ratio of 1.90 and a debt-to-equity ratio of 0.78. The stock's fifty day simple moving average is $145.21 and its 200 day simple moving average is $191.30.

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, beating analysts' consensus estimates of $1.01 by $0.07. The company had revenue of $850.48 million during the quarter, compared to the consensus estimate of $835.14 million. Zscaler had a negative net margin of 2.44% and a negative return on equity of 0.39%. Zscaler's quarterly revenue was up 25.4% on a year-over-year basis. During the same quarter in the prior year, the firm earned $0.84 EPS. 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, analysts anticipate that Zscaler, Inc. will post -0.03 earnings per share for the current year.

Insider Buying and Selling at Zscaler

In other news, CFO Kevin Rubin sold 1,682 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 $263,384.38. Following the completion of the sale, the chief financial officer owned 46,479 shares in the company, valued at $7,278,146.61. This trade represents a 3.49% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. 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 sale, the executive vice president owned 67,906 shares of the company's stock, valued at $10,633,400.54. This represents a 3.53% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last three months, insiders have sold 12,130 shares of company stock worth $1,892,487. Insiders own 17.20% of the company's stock.

Hedge Funds Weigh In On Zscaler

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Bessemer Group Inc. raised its stake in Zscaler by 3.2% in the third quarter. Bessemer Group Inc. now owns 1,021 shares of the company's stock valued at $306,000 after buying an additional 32 shares in the last quarter. Wedbush Securities Inc. raised its stake in Zscaler by 0.7% during the 3rd quarter. Wedbush Securities Inc. now owns 5,129 shares of the company's stock worth $1,537,000 after acquiring an additional 34 shares in the last quarter. Goldstream Capital Management Ltd raised its stake in Zscaler by 0.3% during the 3rd quarter. Goldstream Capital Management Ltd now owns 12,450 shares of the company's stock worth $3,731,000 after acquiring an additional 34 shares in the last quarter. Kentucky Retirement Systems Insurance Trust Fund increased its stake in Zscaler by 1.4% in the third quarter. Kentucky Retirement Systems Insurance Trust Fund now owns 2,569 shares of the company's stock valued at $770,000 after purchasing an additional 36 shares during the period. Finally, Advisor OS LLC increased its stake in Zscaler by 4.6% in the third quarter. Advisor OS LLC now owns 879 shares of the company's stock valued at $263,000 after purchasing an additional 39 shares during the period. Hedge funds and other institutional investors own 46.45% of the company's stock.

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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