ZS Should I Buy
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Zscaler Inc (ZS) does not present a compelling buy opportunity for a beginner, long-term investor at this time. Despite strong revenue growth and improving financial metrics, the bearish technical indicators, increased insider selling, cautious analyst sentiment, and rising competition in the cybersecurity space suggest holding off on investment until clearer positive signals emerge.
The technical indicators for ZS are mixed to bearish. The MACD histogram is positive and expanding, suggesting upward momentum, but the RSI is neutral at 56.115, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key resistance levels are at 145.711 and 154.177, while support levels are at 118.302 and 109.836. The stock is trading near its pivot point of 132.006, indicating indecision in the market.
Revenue increased by 25.91% YoY in Q2 2026, showing strong top-line growth.
The cybersecurity industry is expected to grow significantly, with increasing investment interest.
Analysts highlight Zscaler's competitive positioning and potential in AI security solutions.
Insider selling has increased by 1511.18% over the last month, signaling potential lack of confidence from company insiders.
Analysts have lowered price targets, citing increased competition and cautious outlooks.
SaaS companies are facing market panic due to AI competition, which could impact Zscaler's growth prospects.
In Q2 2026, Zscaler's revenue increased by 25.91% YoY to $815.8M. Net income improved significantly, up 344.23% YoY, but remains negative at -$34.31M. EPS also improved by 320% YoY to -0.21. Gross margin slightly declined to 76.55%, down 0.69% YoY. Overall, the company shows strong growth trends but still struggles with profitability.
Analyst sentiment is mixed to cautious. KeyBanc lowered its price target to $160, citing a dynamic environment and mixed survey results. BTIG downgraded the stock to Neutral due to increased competition and cautious feedback. However, firms like Oppenheimer and UBS maintain Buy ratings, citing Zscaler's competitive positioning and opportunities in AI security. Price targets have generally been revised downward across the board.
