ZS Should I Buy
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Zscaler Inc (ZS) does not present a compelling buy opportunity for a beginner, long-term investor with $50,000-$100,000 available for investment. The stock faces significant competitive pressures, insider selling, and mixed analyst sentiment. While there are some positive financial growth trends, the lack of strong catalysts and bearish technical and options data suggest holding off on an investment at this time.
The MACD is positive but contracting, indicating weakening momentum. RSI is neutral at 45.891, and moving averages are converging, showing no clear trend. The stock is trading near its pivot level of 130.227, with resistance at 141.721 and support at 118.733. Overall, the technical indicators suggest a neutral to slightly bearish outlook.
Zscaler was recently awarded the Google Cloud Partner of the Year Award for Security, which highlights its leadership in cloud security. Additionally, the company reported strong YoY revenue growth of 25.91% in Q2 2026.
Morgan Stanley downgraded Zscaler due to increased competition and lack of near-term catalysts. Insider selling has surged by 1511.18% over the last month, and hedge funds remain neutral. Analyst sentiment is mixed, with several firms lowering price targets and expressing concerns over competitive pressures and decelerating growth.
In Q2 2026, Zscaler's revenue increased by 25.91% YoY to $815.75M, and net income improved significantly by 344.23% YoY, though it remains negative at -$34.31M. EPS also improved by 320% YoY to -0.21. However, gross margin slightly declined by 0.69% YoY to 76.55%. While the financials show growth, profitability remains a concern.
Recent analyst ratings are mixed to negative. Morgan Stanley downgraded the stock to Equal Weight with a reduced price target of $155. KeyBanc and BTIG also expressed cautious views, citing increased competition and a challenging market environment. However, some analysts, like Oppenheimer and Wells Fargo, maintain a positive long-term outlook with price targets ranging from $200 to $275.
