Zscaler (ZS) Stock Falls 8% as BTIG Cuts Rating on Competition Risk

TLDR

• Zscaler (ZS) dropped around 8% on April 9, 2026, hitting a 52-week low of $127.88
• BTIG downgraded ZS from Buy to Neutral and removed it from its top picks list
• Field checks with five contacts flagged rising competition from Cloudflare and Netskope
• ZS is now down 39% year-to-date and 56% over the past six months
• BTIG cut its FY2027 ARR estimate to $4.355B, below the Street consensus of $4.447B

Zscaler stock fell roughly 8% on Wednesday, April 9, hitting a 52-week low of $127.88. The sell-off came after BTIG analyst Gray Powell downgraded the stock from Buy to Neutral and pulled it from the firm’s first-half 2026 top picks list.

Zscaler, Inc., ZS

The downgrade was driven by field checks with five industry contacts over the past week. While near-term demand looked stable, the feedback for the next six to 12 months was cautious across most contacts.

BTIG pointed to increased competition as the core issue. Cloudflare and Netskope were named as the most pressing threats. Firewall vendors were also called out for doing a better job upselling their own SASE capabilities to existing customers, making it harder for Zscaler to win incremental business.

The firm said the Zscaler platform story is not playing out as expected six months ago.

BTIG Cuts Revenue Forecasts

BTIG revised its FY2027 revenue model, now projecting annual recurring revenue of $4.355 billion, up 16.5% year-over-year. That’s down from its prior estimate of $4.391 billion and sits below the Wall Street consensus of $4.447 billion.

The stock now trades down 39% year-to-date. That compares to a 24% decline across BTIG’s broader coverage universe over the same period. The six-month decline stands at 56%.

Not everyone on Wall Street shares BTIG’s caution, though. The overall analyst consensus on ZS remains at Buy. Price targets range from $155 to $335.

Cantor Fitzgerald kept its Overweight rating after Zscaler posted strong Q2 fiscal 2026 results. The company beat estimates on revenue, ARR, earnings per share, and free cash flow, and raised its full-year guidance across key metrics.

Other Recent Developments

Freedom Capital Markets held its Buy rating but trimmed its price target from $320 to $270, citing a reassessment of SaaS valuations. Wells Fargo initiated coverage with an Overweight rating and a $200 price target, pointing to platform growth and a stable core business.

Zscaler also recently announced an expansion of its data sovereignty capabilities with a planned deployment in Canada. The company currently runs 160 data centers globally.

Evercore flagged that Anthropic’s new Claude Mythos model, focused on cybersecurity tasks, could put additional pressure on cybersecurity stocks, including Zscaler.

At the time of reporting, ZS had a market cap of $22.17 billion. Average daily trading volume sits at around 2.75 million. The technical sentiment signal is currently rated Sell.

The stock was trading near its 52-week low of $128 as of April 9, 2026.

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