In a recent development, Zscaler, a prominent cybersecurity firm, has announced its financial results for the second quarter, surpassing market expectations. The company also adjusted its revenue projections upwards for the fiscal year 2026. This announcement has led to varied reactions from financial analysts, with some lowering their price targets for the company's stock despite the positive earnings report. The revisions suggest a complex interplay of strong financial performance and evolving market sentiments regarding Zscaler's valuation.
Zscaler Navigates Analyst Revisions Following Stellar Q2 Performance
On February 27, 2026, Zscaler Inc. (NASDAQ: ZS) released its second-quarter earnings, showcasing a robust financial performance that exceeded analyst estimates. The company reported adjusted earnings per share of $1.01, outperforming the consensus estimate of $0.90. Quarterly revenue also impressed, reaching $815.75 million against an anticipated $798.82 million. Jay Chaudhry, CEO of Zscaler, attributed this success to the company's Zero Trust platform, emphasizing its critical role in securing the rapidly evolving landscape of AI and agentic workflows. Furthermore, Zscaler updated its fiscal year 2026 adjusted EPS guidance, moving from $3.99 to a range of $4.02, surpassing the $3.81 estimate. The revenue outlook was similarly adjusted upwards to between $3.31 billion and $3.32 billion, exceeding the $3.3 billion forecast.
Despite these strong financial indicators, several prominent analysts have recalibrated their price targets for Zscaler's stock. Mike Cikos of Needham maintained a 'Buy' rating but reduced his price target from $310 to $180. Similarly, Rob Owens from Piper Sandler upheld a 'Neutral' rating, adjusting the price target from $260 to $185. Citizens analyst Trevor Walsh, while maintaining a 'Market Outperform' rating, also lowered the price target from $355 to $290. These adjustments suggest that while Zscaler's operational performance remains strong, analysts are factoring in broader market dynamics or re-evaluating long-term growth potentials, leading to a more conservative valuation for the stock in the immediate future.
The recent analyst revisions for Zscaler underscore a fascinating aspect of market analysis: strong financial results do not always translate to immediate stock appreciation or unwavering analyst optimism. It highlights the importance of discerning the nuances behind market sentiment. For investors, this situation offers a valuable lesson in looking beyond headline figures and understanding the intricate factors—such as future growth projections, competitive landscape, and overall market conditions—that influence expert opinions and stock valuations. It encourages a more comprehensive and critical approach to investment decisions, reminding us that even in the face of stellar performance, vigilance and a deeper understanding of market forces are paramount.