ZS Should I Buy
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Zscaler Inc (ZS) is not a strong buy at the moment for a beginner investor with a long-term horizon. While the company shows strong revenue growth and promising opportunities in the cybersecurity space, the technical indicators are bearish, and the stock is likely to face short-term headwinds. The absence of strong trading signals and mixed analyst sentiment further supports a cautious approach. A hold position is recommended until clearer bullish signals emerge.
The MACD is above 0 and positively contracting, suggesting some bullish momentum, but RSI is neutral at 37.606, and moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below the pivot level of 155.634, with key support at 147.268 and resistance at 164. Overall, the technical setup leans bearish.
Revenue growth of 25.91% YoY in Q2 2026 demonstrates strong business momentum.
Increasing adoption of AI-driven cybersecurity tools creates long-term growth opportunities.
Analysts highlight Zscaler's competitive positioning and expanding platform adoption.
Bearish technical indicators and weak short-term price trend.
Analysts have lowered price targets due to broader market compression and decelerating ARR growth.
High put-call ratio in options data reflects bearish sentiment.
Gross margin dropped slightly YoY, indicating potential cost pressures.
In Q2 2026, Zscaler reported a revenue increase of 25.91% YoY to $815.75M. Net income improved significantly by 344.23% YoY but remains negative at -$34.31M. EPS also improved by 320% YoY to -$0.21. However, gross margin dropped slightly to 76.55%, down -0.69% YoY.
Analyst sentiment is mixed. While most analysts maintain Buy or Outperform ratings, several firms have lowered their price targets due to broader market conditions and decelerating ARR growth. Current price targets range from $195 to $275, with a median target around $250, suggesting upside potential but with caution.
