Key Takeaways
- Shares touched $140.56, marking a 52-week low with an 8.16% single-day decline
- Year-over-year performance shows a 34.48% decline, with six-month losses approaching 47%
- Second quarter fiscal 2026 sales jumped 26% annually to $815.8 million, surpassing projections
- Multiple Wall Street firms including TD Cowen, BMO Capital, and Stifel reduced their price objectives post-earnings
- Wells Fargo bucked the trend with an Overweight rating and $200 target, viewing current weakness as an entry opportunity
Shares of Zscaler touched their lowest point in a year on Monday, surrendering 8.16% to close at $140.56. The cybersecurity firm’s valuation has been cut in half from levels above $300 seen in recent quarters.
The decline came in the wake of what appeared to be a solid fiscal second quarter performance. The company delivered $815.8 million in sales, representing 26% year-over-year expansion and topping the Street’s $798 million projection. Adjusted earnings per share reached $1.01, comfortably exceeding the $0.89 consensus.
The disconnect? Forward-looking statements.
Investors reacted negatively to management’s billings trajectory and conservative profit projections for the current fiscal year. The market interpreted these signals as evidence that the company’s explosive growth era may be moderating — triggering a swift exodus from the stock.
Since the start of the calendar year, shares have declined approximately 32.51%. The six-month chart tells an even grimmer story, with losses nearing 47%.
Technical indicators paint a bearish picture as well. The equity currently flashes a Sell signal based on momentum metrics, while the company’s market capitalization has contracted to roughly $24.41 billion.
Wall Street responded swiftly following the earnings release. TD Cowen adjusted its price objective downward to $220 from $260, pointing to headwinds from market compression. BMO Capital lowered its forecast to $210 from $315, despite raising its fiscal 2026 annual recurring revenue projection by $32 million — attributing the target reduction primarily to non-organic considerations.
Stifel delivered the steepest cut, reducing its target to $180 from $320. Nevertheless, the firm acknowledged that Zscaler’s second quarter performance topped both its own internal projections and management’s guidance across critical operational metrics.
Contrarian Perspective From Wells Fargo
Amid the downgrade cycle, one prominent voice emerged with a bullish stance. Wells Fargo launched coverage on March 3 with an Overweight recommendation and $200 price target, arguing that anxiety surrounding Red Canary has created an attractive entry point.
The bank highlighted Zscaler’s commanding position among enterprise clients — serving 45% of Fortune 500 companies and 40% of Global 2000 organizations — as a durable competitive moat. Wells Fargo projects that new customer acquisitions will contribute between $300 and $400 million in annual revenue, dismissing saturation concerns as premature.
The firm anticipates 20% growth rates can be maintained through the company’s Zero Trust Exchange platform, data protection solutions, and artificial intelligence-powered products.
From a fundamental perspective, Zscaler continues to demonstrate strong unit economics with a 77% gross profit margin, while annual recurring revenue climbed 25% in lockstep with top-line growth. The organization also revealed plans for a Canadian data center deployment, strengthening its data sovereignty offerings.
Price Target Landscape
InvestingPro data indicates that 39 analysts have recently increased their earnings projections, with the platform flagging the stock as trading below intrinsic value at present levels.
For the third quarter of fiscal 2026, management projected revenue between $834 and $836 million alongside earnings per share of $1.00 to $1.01, both modestly above prevailing Street expectations at the time of guidance.
The stock settled at $140.56 on March 24, 2026 — establishing the lowest closing price within the trailing 52-week period.
