Zscaler hit a fresh 52-week low on Monday, falling 8.16% to $140.56. That’s a painful drop for a stock that was trading above $300 not too long ago.
The sell-off came despite the company posting a strong fiscal Q2. Revenue came in at $815.8 million, up 26% year-over-year and ahead of the $798 million consensus. Non-GAAP EPS of $1.01 also beat the $0.89 estimate by a wide margin.
So why is the stock down? Guidance.
Management’s billings growth outlook and cautious profit forecast for fiscal 2025 spooked investors. The market read it as the company’s high-growth phase beginning to cool — and it sold first, asked questions later.
Year-to-date, ZS is down around 32.51%. Over the past six months, the stock has lost close to 47%.
The technical picture isn’t pretty either. The stock carries a Sell signal on technical sentiment, and the market cap has dropped to around $24.41 billion.
Analysts moved quickly after earnings. TD Cowen trimmed its price target to $220 from $260, citing concerns over market contraction. BMO Capital cut its target to $210 from $315, raising its fiscal 2026 annual recurring revenue estimate by $32 million but attributing the target reduction to largely inorganic factors.
Stifel went furthest, slashing its target to $180 from $320. Even so, Stifel acknowledged that Zscaler’s Q2 results exceeded its own guidance and estimates across key metrics.
Not everyone is bearish. On March 3, Wells Fargo initiated coverage with an Overweight rating and a $200 price target. The firm said concerns around Red Canary created a favorable entry point.
Wells Fargo cited Zscaler’s grip on large enterprises — 45% of the Fortune 500 and 40% of the Global 2000 — as a key structural advantage. It sees new logo additions contributing $300 to $400 million annually and called market saturation fears “overstated.”
The firm expects 20% growth to be sustained through Zero Trust Exchange, data security, and AI-driven offerings.
On the fundamentals side, Zscaler maintains a 77% gross margin and annual recurring revenue grew 25% to keep pace with revenue growth. The company also announced a planned data center deployment in Canada, expanding its data sovereignty capabilities.
Thirty-nine analysts have revised earnings estimates upward recently, according to InvestingPro, which also flags the stock as undervalued at current levels.
For Q3 fiscal 2026, Zscaler guided for revenue of $834 to $836 million and EPS of $1.00 to $1.01, both slightly ahead of consensus estimates at the time.
The stock closed at $140.56 on March 24, 2026 — its lowest point in 52 weeks.
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