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

Zacks Research downgraded shares of Zscaler (NASDAQ:ZS) from a hold rating to a strong sell rating in a research note issued to investors on Thursday morning,Zacks.com reports.

ZS has been the topic of several other reports. Macquarie Infrastructure began coverage on Zscaler in a research note on Friday, October 31st. They issued an “outperform” rating and a $390.00 target price on the stock. Sanford C. Bernstein upgraded Zscaler from a “market perform” rating to an “outperform” rating and set a $228.00 price objective on the stock in a research report on Friday, February 13th. Wedbush upped their target price on Zscaler from $330.00 to $350.00 and gave the company an “outperform” rating in a report on Monday, November 10th. Loop Capital set a $320.00 price objective on shares of Zscaler in a research report on Thursday, December 11th. Finally, Berenberg Bank dropped their target price on shares of Zscaler from $390.00 to $320.00 and set a “buy” rating for the company in a research report on Friday. One analyst has rated the stock with a Strong Buy rating, thirty-four have issued a Buy rating, six have given a Hold rating and two have given a Sell rating to the company. According to MarketBeat, the stock currently has an average rating of “Moderate Buy” and a consensus target price of $274.37.

Zscaler Price Performance

Zscaler stock opened at $146.99 on Thursday. The business has a fifty day moving average price of $198.92 and a 200-day moving average price of $255.06. Zscaler has a one year low of $140.56 and a one year high of $336.99. The firm has a market capitalization of $23.44 billion, a P/E ratio of -349.98, a PEG ratio of 299.64 and a beta of 1.02. The company has a debt-to-equity ratio of 0.86, a current ratio of 1.82 and a quick ratio of 1.82.

Zscaler (NASDAQ:ZS) last issued its earnings results on Thursday, February 26th. The company reported $1.01 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.89 by $0.12. Zscaler had a negative net margin of 2.25% and a positive return on equity of 0.06%. The firm had revenue of $815.75 million for the quarter, compared to analysts’ expectations of $798.92 million. During the same quarter last year, the business earned $0.78 earnings per share. The business’s revenue was up 25.9% on a year-over-year basis. Zscaler has set its Q3 2026 guidance at 1.000-1.010 EPS and its FY 2026 guidance at 3.990-4.020 EPS. As a group, equities research analysts forecast that Zscaler will post -0.1 EPS for the current year.

Insider Activity at Zscaler

In other Zscaler news, Director James A. Beer sold 653 shares of the firm’s stock in a transaction that occurred on Friday, January 2nd. The shares were sold at an average price of $226.72, for a total value of $148,048.16. Following the completion of the sale, the director directly owned 3,485 shares in the company, valued at $790,119.20. This trade represents a 15.78% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. Also, CEO Jagtar Singh Chaudhry sold 2,843 shares of the company’s stock in a transaction on Tuesday, December 16th. The stock was sold at an average price of $230.82, for a total value of $656,221.26. Following the transaction, the chief executive officer directly owned 347,857 shares in the company, valued at approximately $80,292,352.74. The trade was a 0.81% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold a total of 19,350 shares of company stock valued at $4,471,509 over the last three months. Company insiders own 17.20% of the company’s stock.

Institutional Inflows and Outflows

Several institutional investors have recently modified their holdings of the company. Binnacle Investments Inc acquired a new position in Zscaler in the 3rd quarter worth approximately $25,000. Tradewinds Capital Management LLC lifted its stake in Zscaler by 145.7% during the 3rd quarter. Tradewinds Capital Management LLC now owns 86 shares of the company’s stock valued at $26,000 after acquiring an additional 51 shares during the period. Root Financial Partners LLC purchased a new stake in shares of Zscaler in the 3rd quarter valued at $26,000. McIlrath & Eck LLC acquired a new stake in shares of Zscaler in the third quarter worth $29,000. Finally, AlphaCentric Advisors LLC purchased a new position in shares of Zscaler during the fourth quarter worth $29,000. 46.45% of the stock is currently owned by hedge funds and other institutional investors.

Zscaler News Roundup

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Q2 results beat: adjusted EPS $1.01 vs. $0.89 est., revenue $815.8M vs. ~$799M est., and ARR grew ~25% year/year — signals demand momentum. GlobeNewswire: Q2 Results
• Positive Sentiment: Management is pitching AI security growth and new initiatives (AI Guard, agentic security, India AI/Cyber center with Airtel) as durable secular drivers that expand TAM beyond seat-based SaaS. CFO Interview Airtel AI Center
• Neutral Sentiment: Management issued updated forward guidance and commentary (Q3 EPS range and FY EPS range were provided), creating mixed signals that markets are parsing. Earnings Highlights
• Neutral Sentiment: Executives (CEO & CFO) gave interviews and the full call transcript is available — useful for investors wanting detail on churn, acquisitions and how AI monetization will scale. Earnings Call Transcript
• Negative Sentiment: Wider GAAP loss and higher spending: the company posted a larger net loss driven by increased sales, marketing and R&D, which pressured investor sentiment. Reuters: Wider Loss
• Negative Sentiment: Mixed/uncertain revenue outlook commentary: some outlets reported the company lowered aspects of its revenue outlook, creating confusion and weighing on the stock despite EPS beats. Benzinga: Revenue Guidance Report
• Negative Sentiment: Broad analyst price‑target cuts today from multiple firms (Canaccord, Morgan Stanley, Oppenheimer, Berenberg, Needham, and others) have amplified selling pressure even as many kept “buy/outperform” stances — the cuts compress perception of near‑term upside. MarketScreener: Analyst Cuts
• Negative Sentiment: Market reaction: investors appear to be focusing on margin/expense trajectory, competitive pressure and near-term revenue clarity rather than the company’s AI growth story — producing the stock decline. Seeking Alpha: Market Reaction

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.