Zscaler Guidance Miss Sends Palo Alto Networks Shares Down 3%
PANW•Zscaler shares plunged 25.8% to $137.03 after its fiscal Q3 guidance missed expectations, triggering 15 price-target cuts including Rosenblatt’s revision to $200 from $223. The sector downturn dragged Palo Alto Networks down 3% and CrowdStrike down 2.5%, with Zscaler options volume surging fifteenfold.
1. Market Reaction
Zscaler’s fiscal third-quarter results beat estimates with $1.08 adjusted EPS and $850 million in revenue, but its current-quarter guidance fell short, causing a 25.8% slide to $137.03. This selloff pulled Palo Alto Networks shares down 3% and CrowdStrike shares down 2.5% in early trading.
2. Analyst Response
Fifteen analysts cut Zscaler price targets, led by Rosenblatt lowering its target to $200 from $223. Of the 45 analysts covering Zscaler, 36 still rate it buy or better, but growing downgrade risk is spilling over to sector peers such as Palo Alto Networks.
3. Implications for Palo Alto Networks
The broad cybersecurity pullback heightens uncertainty around Palo Alto Networks’ near-term growth forecasts. While PANW has not revised its own guidance, elevated volatility and potential analyst downgrades suggest increased risk for the stock in coming weeks.
