Zscaler (ZS) Shares Fall 8%, Hitting 52-Week Low Even After Earnings Top Estimates – The Reason Why

TLDR

• ZS reached a new 52-week low of $140.56, marking an 8.16% drop for the trading day
• The share price has fallen 34.48% over the past 12 months and roughly 47% across the last six months
• Fiscal 2026 Q2 revenue climbed 26% year-over-year to $815.8 million, outpacing analyst estimates
• Analysts at TD Cowen, BMO Capital, and Stifel all lowered their price targets after the earnings release
• Wells Fargo initiated coverage with an Overweight rating and a $200 price target, calling current price levels a buying opportunity

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(SeaPRwire) –   Zscaler touched a fresh 52-week low on Monday, sliding 8.16% to $140.56. That is a steep, painful decline for a stock that traded above $300 just a short time ago.

Zscaler, Inc. (Ticker: ZS)

The sell-off occurred even though the company posted strong results for its fiscal second quarter. Revenue came in at $815.8 million, up 26% year-over-year and ahead of the $798 million consensus forecast. Non-GAAP EPS of $1.01 also beat the $0.89 estimate by a wide margin.

So what is driving the stock decline? The answer is guidance.

Management’s billings growth outlook and cautious profit forecast for fiscal 2025 alarmed investors. The market interpreted this as a sign that the company’s high-growth phase is starting to cool off — and investors chose to sell first, ask questions later.

Year-to-date, ZS is down around 32.51%. Over the past six months, the stock has lost close to 47% of its value.

The technical outlook for the stock is also unfavorable. The stock carries a Sell signal based on technical sentiment, and its market capitalization has fallen to around $24.41 billion.

Analysts adjusted their outlooks quickly after earnings were released. TD Cowen trimmed its price target to $220 from $260, citing concerns over market contraction. BMO Capital cut its target to $210 from $315; the firm actually raised its fiscal 2026 annual recurring revenue estimate by $32 million, but attributed the target cut largely to inorganic factors.

Stifel made the steepest cut, slashing its target to $180 from $320. Even so, Stifel acknowledged that Zscaler’s Q2 results exceeded its own guidance and estimates across all key metrics.

Wells Fargo Takes a Contrary View

Not all analysts are bearish on the stock. On March 3, Wells Fargo initiated coverage with an Overweight rating and a $200 price target. The firm said concerns surrounding Red Canary have created a favorable entry point for buyers.

Wells Fargo cited Zscaler’s strong foothold with large enterprises — 45% of the Fortune 500 and 40% of the Global 2000 use its services — as a core structural advantage. The firm projects new customer acquisitions will add $300 to $400 million in annual revenue, and called fears of market saturation “overstated.”

The firm expects 20% annual growth will be sustained through Zscaler’s Zero Trust Exchange, data security, and AI-driven offerings.

On the fundamental side, Zscaler maintains a 77% gross margin, and annual recurring revenue grew 25% to keep pace with overall revenue growth. The company also announced a planned data center deployment in Canada, which will expand its data sovereignty capabilities.

Analyst Targets vs. Current Share Price

Thirty-nine analysts have revised their earnings estimates upward recently, according to data from InvestingPro, which also flags the stock as undervalued at its current price levels.

For Q3 fiscal 2026, Zscaler guided for revenue of $834 to $836 million and EPS of $1.00 to $1.01, both of which were slightly ahead of consensus estimates at the time.

The stock closed at $140.56 on March 24, 2026 — its lowest closing level in 52 weeks.