Key Takeaways
- Zscaler fell 14% in the past week as reports from Fortinet and Check Point and a tech selloff hit security stocks, Cloudflare among them.
- Fortinet beat estimates and still sank as its service revenue slowed, so Zscaler’s late-November report will likely need more than a beat.
- At a forward P/E well under its own history, Zscaler is a buy if those results run ahead of the guide.
Zscaler (ZS) is down 14% in the week through the Nov. 2 close, giving back most of its PHP-flaw rally with no news of its own.
The selling started at Fortinet (FTNT), spread as tech sold off, and picked up again when Check Point Software (CHKP) reported on Nov. 2. Cloudflare (NET) fell 20% over the same week.
Fortinet sank, and the security group went with it
Fortinet beat estimates after the Oct. 28 close and raised its 2026 revenue and billings outlook, and product revenue jumped 37%. But service revenue grew just 13%, and Fortinet cut its full-year service forecast to $5.15 billion to $5.17 billion, from $5.18 billion to $5.22 billion. The stock closed down 20.1% on Oct. 29, and Zscaler fell about 3% with it.
Fortinet blamed the slowdown on the timing of large new deals, but investors sold subscription names anyway. Zscaler leans on subscriptions even more: about 98% of its fiscal 2026 revenue came from subscriptions, and it expects growth to slow to 16.6% to 17.5% in fiscal 2027, from 25%.
Then tech and Check Point piled on
Tech sold off on Oct. 30 after disappointing results from Amazon and Intel, and the Nasdaq Composite fell 2.86%, its worst day since June 5. Zscaler lost 4.0% and Cloudflare 9.5%.
On Nov. 2, as tech kept falling, Check Point fell 6.98% after third-quarter revenue slipped 1.1% and missed estimates. Zscaler dropped 5.9%, and Cloudflare fell 5.5% after Jefferies cut its price target.
Cloudflare had rallied as website operators rushed to patch the PHP flaws, and it reports third-quarter results after the close on Nov. 5. Will that rush to patch show up in its numbers?
The first-quarter report faces a higher bar
At its Oct. 6 Investor Day, Zscaler stood by its fiscal 2027 outlook and laid out a base case for ARR above $8 billion by fiscal 2031. Neither has changed.
Consensus has revenue compounding at about 17% a year through fiscal 2029, with the fiscal 2027 estimate of $3.93 billion near the top of the $3.91 billion to $3.94 billion guide:
Nothing Zscaler did this week should move those estimates.
First-quarter results are due in late November, on revenue guidance of $935 million to $939 million. After Fortinet, the stock likely needs more than a beat: net new ARR ahead of plan, or a raised full-year outlook.
TIKR tracks 47 analysts on Zscaler. How many say “Buy”?
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A multiple well below its own history
The selling has left Zscaler cheaper than it usually trades:
It ended October at 49x forward earnings, against a three-year average of 63x, and the Nov. 2 drop pushed it lower still.
Another guidance reset like May’s would hurt: the stock fell 31.5% on May 27, the day after that report. At this multiple, though, buying before the late-November report looks like a better bet than waiting for it.
If security budgets really are softening, Cloudflare’s Nov. 5 report should show it first.
So what is Zscaler stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
