Why Zscaler Shares Are Falling Today

Zscaler Inc ZS is trading significantly lower Friday after the company reported fiscal 2022 second-quarter financial results and issued guidance that disappointed some analysts.

Zscaler said quarterly revenue increased 63% year-over-year to $255.56 million, which beat the $241.56 million estimate. The cloud-native cybersecurity company reported quarterly earnings of 13 cents per share, which beat the estimate of 11 cents per share. 

"Customers are not only gaining security advantages from our Zero Trust model but they are also reaping the benefits of faster innovation and economics from our global cloud, which is now processing more than 210 billion transactions per day," said Jay Chaudhry, chairman and CEO of Zscaler.

Zscaler expects full fiscal-year 2022 revenue to be between $1.045 billion and $1.05 billion and adjusted earnings to be between 54 cents and 56 cents per share.

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Analyst Assessment: Several analyst firms lowered price targets on the stock following Zscaler's financial results:

• Wells Fargo analyst Andrew Nowinski maintained Zscaler with an Overweight rating and lowered the price target from $400 to $350.
• Mizuho analyst Gregg Moskowitz maintained Zscaler with a Buy rating and lowered the price target from $360 to $350.
• Deutsche Bank analyst Patrick Colville maintained Zscaler with a Buy rating and lowered the price target from $430 to $280.
• BMO Capital analyst Keith Bachman maintained Zscaler with an Outperform rating and lowered the price target from $415 to $270.

ZS Price Action: Zscaler has traded as low as $157.03 and as high as $376.11 over a 52-week period.

The stock was down 19% at $213.40 at time of publication.

Photo: jaydeep_ from Pixabay.