Citigroup has reduced its price target for Zscaler (NASDAQ: ZS) from $350.00 to $305.00, as noted in a research report released to investors on Tuesday. Despite this adjustment, Citigroup maintains a “buy” rating on the stock, indicating continued confidence in the company’s potential.
Several other brokerages have also issued recent assessments of Zscaler’s stock. On October 31, 2023, Macquarie initiated coverage with an “outperform” rating and a target price of $390.00. In contrast, Robert W. Baird raised its target from $350.00 to $360.00, also designating the stock as “outperform.” Meanwhile, the Royal Bank of Canada lowered its target from $366.00 to $290.00 while maintaining an “outperform” rating. Zacks Research upgraded Zscaler from a “strong sell” to a “hold” rating on October 2, 2023. Lastly, Scotiabank adjusted its price objective down from $334.00 to $320.00 with a “sector outperform” designation.
Analysts currently express a range of opinions on Zscaler’s stock. One analyst has issued a “strong buy” rating, thirty-three have given it a “buy” rating, eight have assigned a “hold” rating, and one has labeled it as a “sell.” According to data from MarketBeat, Zscaler holds a consensus rating of “moderate buy” with an average price target of $317.63.
Recent Financial Performance
Zscaler reported its quarterly earnings on November 25, 2023, revealing earnings per share (EPS) of $0.96, surpassing the consensus estimate of $0.85 by $0.11. Revenue for the quarter amounted to $788.11 million, exceeding expectations of $773.86 million. The company experienced a negative net margin of 1.45% and a negative return on equity of 0.12%. Year-over-year, revenue increased by 25.5%, compared to $0.77 EPS from the same quarter last year.
Looking ahead, Zscaler has set guidance for fiscal year 2026 with EPS projected between $3.780 and $3.820, alongside second-quarter guidance of $0.890 to $0.900 EPS. Market analysts estimate that Zscaler will post -0.1 EPS for the current fiscal year.
Insider Transactions and Institutional Activity
In other developments, CFO Kevin Rubin sold 3,303 shares at an average price of $230.82 on December 16, 2023, totaling $762,398.46. Following this transaction, Rubin holds 48,161 shares valued at approximately $11.12 million, reflecting a 6.42% decrease in his position. This sale was disclosed in filings with the SEC.
Similarly, Executive Vice President Raj Judge sold 3,438 shares on the same date, also at an average price of $230.82, generating $793,559.16. Post-sale, Judge owns 70,394 shares valued at around $16.25 million, marking a 4.66% reduction in ownership. Over the past ninety days, insiders have sold a total of 22,550 shares, valued at $5.51 million. Company insiders currently hold 17.20% of the stock.
Several hedge funds and institutional investors have recently adjusted their stakes in Zscaler. Bessemer Group Inc. increased its holdings by 3.2% in the third quarter, now owning 1,021 shares valued at $306,000. Cox Capital Management LLC raised its shares by 0.6%, owning 5,576 shares worth $1.67 million. Brookstone Capital Management and Wedbush Securities Inc. also reported slight increases in their holdings. Currently, institutional investors control 46.45% of Zscaler’s stock.
Zscaler, a cloud security company, offers a platform designed to protect users, applications, and data as organizations shift from traditional security models. The company advocates a zero-trust approach, providing secure access to the internet and various applications regardless of user location. Zscaler aims to simplify security for modern workforces, positioning its services as alternatives to legacy systems and VPNs. Key offerings are centered around the Zscaler Zero Trust Exchange, a cloud platform enforcing security policies in real-time.
