Zscaler (NASDAQ:ZS) Shares Gap Down - Here's What Happened

Key Points

• Zscaler shares gapped down at the open, falling from a prior close of $175.25 to $168.12 before trading around $170.96.
• Analyst sentiment remains broadly positive, with a consensus “Moderate Buy” rating and average price target of $261.26, though several firms have recently cut targets and one downgraded the stock.
• The company recently reported strong quarterly results, beating EPS and revenue estimates with 25.9% year-over-year revenue growth, while insiders, including the CFO and CEO, sold shares in March.

Zscaler, Inc. (NASDAQ:ZS - Get Free Report) shares gapped down prior to trading on Wednesday . The stock had previously closed at $175.25, but opened at $168.12. Zscaler shares last traded at $170.9580, with a volume of 418,837 shares changing hands.

Wall Street Analysts Forecast Growth

Several equities research analysts have weighed in on ZS shares. Cantor Fitzgerald reaffirmed an "overweight" rating on shares of Zscaler in a research note on Wednesday. Truist Financial decreased their price target on shares of Zscaler from $350.00 to $250.00 and set a "buy" rating for the company in a research note on Tuesday, February 17th. Zacks Research downgraded shares of Zscaler from a "hold" rating to a "strong sell" rating in a research note on Wednesday, April 29th. The Goldman Sachs Group decreased their price target on shares of Zscaler from $290.00 to $257.00 and set a "neutral" rating for the company in a research note on Monday, March 2nd. Finally, TD Cowen lowered their target price on Zscaler from $330.00 to $260.00 and set a "buy" rating on the stock in a research report on Tuesday, February 24th. One equities research analyst has rated the stock with a Strong Buy rating, thirty have assigned a Buy rating, eight have given a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat.com, Zscaler presently has a consensus rating of "Moderate Buy" and a consensus target price of $261.26.

Zscaler Price Performance

The business's fifty day moving average is $143.42 and its 200-day moving average is $197.91. The company has a debt-to-equity ratio of 0.78, a current ratio of 1.90 and a quick ratio of 1.90. The firm has a market cap of $27.73 billion, a PE ratio of -410.55 and a beta of 0.96.

Zscaler (NASDAQ:ZS - Get Free Report) last posted its quarterly earnings data on Thursday, February 26th. The company reported $1.01 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.89 by $0.12. The business had revenue of $815.75 million during the quarter, compared to the consensus estimate of $798.92 million. Zscaler had a negative net margin of 2.25% and a positive return on equity of 0.06%. The firm's quarterly revenue was up 25.9% compared to the same quarter last year. During the same quarter last year, the company 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. On average, research analysts predict that Zscaler, Inc. will post -0.03 earnings per share for the current fiscal year.

Insider Activity

In other news, CFO Kevin Rubin sold 1,682 shares of the business's stock in a transaction 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 transaction, the chief financial officer directly owned 46,479 shares in the company, valued at $7,278,146.61. The trade was a 3.49% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, CEO Jagtar Singh Chaudhry sold 1,941 shares of the business's stock in a transaction 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 owned 345,916 shares of the company's stock, valued at $54,166,986.44. This trade represents a 0.56% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Over the last three months, insiders sold 12,130 shares of company stock worth $1,892,487. Company insiders own 17.20% of the company's stock.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the stock. Westpac Banking Corp boosted its position in Zscaler by 919.0% during the third quarter. Westpac Banking Corp now owns 9,986 shares of the company's stock valued at $2,992,000 after buying an additional 9,006 shares during the period. Korea Investment CORP boosted its position in Zscaler by 24.0% during the third quarter. Korea Investment CORP now owns 98,370 shares of the company's stock valued at $29,478,000 after buying an additional 19,026 shares during the period. Vinva Investment Management Ltd boosted its position in Zscaler by 136.1% during the third quarter. Vinva Investment Management Ltd now owns 11,347 shares of the company's stock valued at $3,400,000 after buying an additional 6,541 shares during the period. Oxbow Advisors LLC purchased a new stake in Zscaler during the fourth quarter valued at about $2,939,000. Finally, Handelsbanken Fonder AB boosted its position in Zscaler by 43.1% during the third quarter. Handelsbanken Fonder AB now owns 55,907 shares of the company's stock valued at $16,753,000 after buying an additional 16,839 shares during the period. 46.45% of the stock is currently owned by institutional investors.

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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