Zscaler shares tumble 31% after Evercore cuts price target by $70 to $155
ZS•Zscaler shares plunged over 31% after Evercore cut its rating to In Line and slashed its price target by $70 to $155, implying over 16% downside. Q3 revenue rose 25% to $850.5 million with adjusted EPS of $1.08, but Q4 guidance of $875–878 million fell short of forecasts.
1. Significant Share Decline and Evercore Reaction
On May 27 Zscaler shares fell over 31% following Evercore’s downgrade from Outperform to In Line and a $70 cut in its price target to $155, implying more than 16% downside. The change reflected concerns over slowing net new logos and shifts in sales dynamics.
2. Q3 Financial Results
In Q3 total revenue climbed 25% year-over-year to $850.5 million, exceeding the $835.7 million consensus, and adjusted EPS reached $1.08 versus $1.01 expected. The beat was driven by robust Z-Flex uptake, though underlying demand signals were mixed.
3. Q4 and Fiscal 2027 Outlook
For Q4 Zscaler forecast revenue of $875 million to $878 million, with the midpoint below consensus, and adjusted EPS of $1.08 to $1.09 at the lower end of estimates. Early fiscal 2027 guidance implies a 700-basis-point deceleration in ARR and revenue growth year-over-year.
4. Additional Analyst Revisions
At least 22 analyst firms lowered price targets, with Morgan Stanley cutting its target to $145 and Wedbush highlighting the implied 700-bp ARR growth slowdown. TD Cowen and JPMorgan acknowledged solid Q3 metrics but flagged deceleration risks in fiscal 2027 guidance.
