Zscaler (ZS) Stock Drops 8% to 52-Week Low Despite Earnings Beat – Here’s Why

TLDR

• ZS hit a new 52-week low of $140.56, down 8.16% on the day
• Stock is down 34.48% over the past year and roughly 47% over six months
• Q2 fiscal 2026 revenue rose 26% year-over-year to $815.8 million, beating estimates
• Analysts at TD Cowen, BMO Capital, and Stifel all cut price targets following earnings
• Wells Fargo initiated with Overweight and a $200 target, calling current levels a buying opportunity

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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.

Zscaler, Inc., ZS

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.

Wells Fargo Takes a Different View

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.

Analyst Targets vs. Current Price

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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