BTIG Downgrades Zscaler (ZS) to Neutral
BTIG analyst Gray Powerll downgraded Zscaler (NASDAQ: ZS) from Buy to Neutral.
The analyst comments "We are downgrading ZS to Neutral from Buy and removing the company from BTIG’s 1H’26 Top Picks list. With ZS shares down 39% YTD vs. a 24% decline in our broader coverage, this downgrade was not an easy decision. That said, we conducted independent field checks with five contacts on ZS over the last week and the data points have changed significantly relative to our work just a few months ago. In the near term, demand appears stable. However, feedback on the next 6 – 12 months skewed cautious across the majority of our contacts. And we are now picking up on a meaningful increase in competition from multiple sources. The two most notable competitive challenges we found stem from Cloudflare (NET, Buy, $243 PT) and Netskope (NTSK, Buy, $17 PT). In addition, we think firewall vendors are doing a better job upselling existing customers on their SASE capabilities, making incremental share gains more difficult for ZS to achieve. Lastly, the ZS platform story is not progressing as we thought it would six months ago. As a result, we are reducing our top-line forecasts for FY27 and are now modeling ARR of $4,355MM / +16.5% y/y vs $4,391MM / +17.3% y/y previously and below the Street at $4,447MM (Visible Alpha)."
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Shares of Zscaler closed at $137.85 yesterday.