Citigroup Revises Zscaler Price Target to $305 Amid Market Changes

On October 31, 2023, Citigroup adjusted its price target for Zscaler (NASDAQ: ZS) from $350.00 to $305.00 in a research note released to investors. Despite this reduction, the brokerage maintains a buy rating on the stock, reflecting confidence in the company’s long-term potential.

Several other financial institutions have recently provided their assessments of Zscaler. Macquarie initiated coverage with an outperform rating and a price target of $390.00. In a separate report, Robert W. Baird increased its target price from $350.00 to $360.00 and also rated the stock as outperform. In contrast, Royal Bank of Canada lowered its target from $366.00 to $290.00, maintaining an outperform rating. Zacks Research adjusted its rating from strong sell to hold on October 2. Scotiabank also revised its target downward from $334.00 to $320.00 while keeping a sector outperform rating.

Overall, Zscaler has received substantial attention from analysts. One investment analyst has issued a Strong Buy rating, while thirty-three have assigned a Buy rating. Additionally, eight analysts have given a Hold rating and one has rated it as Sell. According to MarketBeat, the consensus rating stands at Moderate Buy, with a consensus price target of $317.63.

Recent Earnings and Financial Performance

Zscaler recently reported its quarterly earnings on November 25, 2023. The company delivered $0.96 earnings per share (EPS), surpassing the consensus estimate of $0.85 by $0.11. Zscaler’s quarterly revenue reached $788.11 million, exceeding expectations of $773.86 million. Despite these positive figures, the company recorded a negative net margin of 1.45% and a negative return on equity of 0.12%. Compared to the same quarter last year, revenue increased by 25.5%, while EPS for the previous year stood at $0.77.

Looking ahead, Zscaler has set a fiscal year 2026 guidance of $3.780 to $3.820 for EPS and a second-quarter guidance of $0.890 to $0.900 for EPS. Analysts forecast that Zscaler will report an EPS of -0.1 for the current fiscal year.

Insider Transactions and Institutional Investments

In related news, Zscaler’s Chief Financial Officer, Kevin Rubin, sold 3,303 shares on December 16, 2023, at an average price of $230.82, totaling approximately $762,398.46. Post-transaction, Rubin holds 48,161 shares, valued at around $11,116,522.02, signifying a 6.42% reduction in his ownership.

Similarly, Executive Vice President Raj Judge sold 3,438 shares on the same day for a total value of $793,559.16, leaving him with 70,394 shares valued at $16,248,343.08, which reflects a 4.66% decrease in his stake. Over the past ninety days, insiders have sold a cumulative 22,550 shares, valued around $5,511,509. Currently, company insiders hold approximately 17.20% of the total stock.

Institutional investors have also been active in the market. During the third quarter, Bessemer Group Inc. increased its holdings in Zscaler by 3.2%, now owning 1,021 shares worth $306,000. Other firms, including Cox Capital Management LLC and Brookstone Capital Management, have similarly enhanced their positions, indicating strong institutional interest. Currently, institutional investors own about 46.45% of Zscaler’s stock.

Zscaler continues to position itself as a leader in the cloud security sector. The company’s platform provides a zero trust approach to security, facilitating secure access for users and data regardless of location. As organizations increasingly shift away from traditional network-centric models, Zscaler aims to simplify security management while supporting modern, distributed workforces.