Key Stats for Zscaler Stock
- Pre-market price change for Zscaler stock: -2%
- $ZS Share Price as of Apr. 22: $143
- 52-Week High: $337
- $ZS Stock Price Target: $229
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What Happened?
Zscaler (ZS) stock took a hit in pre-market trading today after Morgan Stanley downgraded the cybersecurity company from Overweight to Equal Weight, cutting its price target from $200 to $155.
- Morgan Stanley had originally upgraded Zscaler last year, betting the company could grow into a third major platform vendor.
- The thesis rested on three pillars: the Red Canary acquisition, data security, and digital experience monitoring.
- The problem is that only one of those bets is paying off so far.
- ZDX bookings are up 80% year-over-year and have crossed $100 million in ARR.
- But Red Canary hasn’t shown similar traction.
- The firm noted that Zscaler is still working to properly integrate Red Canary’s capabilities into its Zero Trust Exchange platform, and until that happens, the results aren’t showing up in the numbers.
That puts the spotlight back on Zscaler’s core business — ZIA and ZPA — which are growing in the mid-teens. That’s solid, but it raises a real question: can the company sustain 20%-plus growth once Red Canary becomes an organic comparison in fiscal 2027?
Morgan Stanley also flagged a tougher competitive environment.
More of the market is now “brownfield” — meaning customers already have existing security infrastructure in place, rather than fresh deployments.
That’s driving more pricing competition, especially in large enterprise deals where customers are comparing Zscaler against broader platform vendors with deeper networking capabilities.
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What the Market Is Telling Us About Zscaler Stock
Zscaler stock is down more than 35% year-to-date, worse than the cybersecurity sector average of around 24%. That kind of underperformance puts real pressure on the company to prove the platform expansion story is working.
To be fair, Zscaler’s underlying business is still healthy. The company beat estimates across the board in its most recent quarter and raised full-year guidance.
Cantor Fitzgerald reiterated its Overweight rating following those results, and the company’s Zero Trust franchise remains best in class.
But Morgan Stanley’s concern is forward-looking.
If Red Canary integration stalls and core growth stays in the mid-teens, Zscaler stock may struggle to justify a premium valuation.
Investors will be watching the second half of fiscal 2026 closely for signs that the platform bet is starting to land.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
