The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
| Factor | Score | Distribution | Value | Avg | Verdict |
|---|---|---|---|---|---|
Valuation | 52 | — | 20.1x | Near average | |
Growth | 33 | -23.0% | 5.6% | Below average | |
Quality | 43 | -16.3% | 7.6% | Near average | |
Safety | 55 | -7.0x | 0.4x | Near average | |
Capital Return | 25 | — | 2.19% | Below average | |
Momentum | — | — | — | No data | |
Sentiment | — | — | — | No data |
This section combines price targets, revision history, analyst coverage changes, and an AI summary of what changed on the Street.
Zscaler stock has experienced a sharp revision in its average price target over the last 30 days, with the consensus dropping by 27.9% from $277.18 to $199.77. This downward adjustment reflects a broad reassessment by analysts, with significant Dispersion between the high of $320 and the low of $145, indicating uncertainty regarding the pace of future growth despite the consensus stabilizing in the last seven days.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Zscaler, Inc. (NASDAQ: ZS) is a leading global cloud security platform that provides innovative network security solutions based on a "Zero Trust" architecture to protect users, devices, applications, and cloud workloads. The company generates its revenues primarily from selling software subscriptions to its Zero Trust Exchange cloud platform, in addition to consumption-based protection solutions and professional services, targeting the largest government and commercial organizations worldwide.
During the third quarter of fiscal year 2026, Zscaler achieved strong financial results; quarterly revenue reached $850 million, representing a growth of 25% year-over-year and 4% sequentially, exceeding previous expectations. Although it recorded a GAAP net loss of $34.3 million in the second quarter of 2026 and a cumulative loss of $57.8 million over the trailing twelve months (TTM), the non-GAAP operating margin reached a record high of 23%, an increase of 140 basis points from last year, supported by a non-GAAP gross margin of 80.7%.
The stock is currently trading at $139.73, which is below the average analyst target of $199.2 (42.6%), with a consensus buy rating.
Zscaler's stock fell sharply by 31% on May 27, 2026, as a result of the company presenting future growth and revenue outlooks for the next fiscal year that the markets deemed disappointing. Despite achieving strong results and exceeding expectations in the third quarter, the initial guidance for fiscal year 2027, which projected growth of only 16% to 17% in revenue and ARR, raised investor concerns. Additionally, the departure of two key sales leaders at the end of the third quarter contributed to increased management caution and selling pressure on the stock.
Zscaler's management explained that the departure of two sales leaders under Chief Revenue Officer (CRO) Mike Rich could cause some temporary operational disruptions in the short term. Consequently, the company took a highly conservative and cautious approach in formulating its financial outlook for the fourth quarter of 2026 and for fiscal year 2027. The company has already appointed an internal replacement for one of the departing leaders and is in advanced stages of hiring the other leader to minimize the transition period.
Zscaler is facing rising prices for memory, storage, and processors due to increasing demand from AI data centers, prompting it to accelerate purchases of data center equipment to lock in current prices. This action led to raising the CapEx outlook for fiscal year 2026 to the high single-digit range as a percentage of revenue, with an additional expected increase of 200 basis points in 2027. Consequently, the free cash flow margin outlook for fiscal year 2026 was lowered to a range of 22.8% to 23.3%, compared to the previous outlook of 26.5% to 27%.
Automated analysis for informational purposes only — not investment advice.
Red Canary ended the third quarter of fiscal year 2026 with Annual Recurring Revenue (ARR) of $127 million, and Zscaler expects its contribution to reach $137 million in ARR by the end of fiscal year 2026. However, management expects Red Canary's new net ARR to grow at a slower rate than the rest of Zscaler's core business during 2027. It is worth noting that Red Canary's results will be fully consolidated into the financial statements starting in 2027 and its figures will not be disclosed separately.