Key Takeaways
- Shares reached a 52-week low of $140.56, declining 8.16% during Monday’s session
- The stock has declined 34.48% over the past year and approximately 47% in six months
- Fiscal Q2 2026 revenue climbed 26% year-over-year to $815.8 million, surpassing analyst expectations
- TD Cowen, BMO Capital, and Stifel reduced their price targets after the earnings report
- Wells Fargo launched coverage with an Overweight rating and $200 target, viewing current prices as attractive
Shares of Zscaler reached a new 52-week low on Monday, declining 8.16% to close at $140.56. The cybersecurity provider has experienced significant pressure, trading well below its previous levels above $300.
The decline occurred even though the company delivered solid fiscal Q2 performance. Revenue reached $815.8 million, representing 26% year-over-year growth and exceeding the $798 million analyst consensus. Non-GAAP earnings per share of $1.01 surpassed the $0.89 estimate substantially.
The primary catalyst for the decline? Forward-looking statements.
Executives provided conservative billings growth projections and tempered profit expectations for fiscal 2025, triggering investor concerns. The market interpreted these signals as evidence that the company’s rapid expansion phase may be moderating — prompting immediate selling pressure.
Since the beginning of the year, ZS has fallen approximately 32.51%. The six-month performance shows a decline near 47%.
Technical indicators present a challenging picture. The stock currently displays a Sell signal based on technical sentiment analysis, while market capitalization has contracted to approximately $24.41 billion.
Analyst reactions followed swiftly after the earnings release. TD Cowen reduced its price target from $260 to $220, expressing concerns about potential market contraction. BMO Capital lowered its target from $315 to $210, increasing its fiscal 2026 annual recurring revenue projection by $32 million while attributing the target decrease to predominantly inorganic factors.
Stifel implemented the most substantial reduction, cutting its target from $320 to $180. Despite this move, Stifel noted that Zscaler’s Q2 performance exceeded both company guidance and analyst projections across critical metrics.
Wells Fargo Sees Opportunity in Weakness
Contrarian voices have emerged among the analyst community. Wells Fargo launched coverage on March 3 with an Overweight rating and a $200 price target. The investment firm identified concerns surrounding Red Canary as creating an attractive entry opportunity.
Wells Fargo highlighted Zscaler’s penetration among large enterprises — serving 45% of Fortune 500 companies and 40% of Global 2000 organizations — as a durable competitive moat. The firm projects new customer acquisitions will generate $300 to $400 million in annual contributions and dismissed market saturation concerns as exaggerated.
The analyst expects 20% growth rates to continue through Zero Trust Exchange adoption, data security solutions, and AI-powered product innovations.
From a fundamental perspective, Zscaler maintains a 77% gross margin while annual recurring revenue expanded 25%, matching overall revenue growth rates. Management also revealed plans for a Canadian data center deployment, broadening the company’s data sovereignty infrastructure.
Price Target Landscape Versus Trading Levels
Thirty-nine analysts have recently raised earnings estimates, according to InvestingPro data, which also indicates the stock appears undervalued at present trading levels.
For the upcoming Q3 fiscal 2026, management provided guidance for revenue between $834 and $836 million with EPS ranging from $1.00 to $1.01, both figures modestly above prevailing consensus estimates.
Shares closed at $140.56 on March 24, 2026 — establishing the lowest price point in the trailing 52-week period.
