FBN Securities Cuts Zscaler Target to $150 on Growth Concerns
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
zscalerprice-target
Fazen Markets Editorial Desk
Collective editorial team · methodology
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FBN Securities lowered its price target on Zscaler Inc. shares to $150 from $165, a reduction of 9.1%, citing concerns over near-term growth amid sales execution headwinds. The downgrade was announced on 27 May 2026. Zscaler stock was trading at $130.64 as of 15:30 UTC today, showing a 4.01% intraday gain following a recent sell-off. The new target still implies a potential upside of nearly 15% from current levels. The revision highlights increasing scrutiny on software valuations as enterprise spending cycles lengthen.
Analyst price target revisions are key sentiment drivers for high-growth software stocks, particularly after earnings. The last significant target cut for Zscaler occurred in November 2025 when Barclays lowered its target by $20 to $175 following a quarter of decelerating billings growth. The current macro backdrop features elevated interest rates, with the 10-year Treasury yield hovering near 4.3%, pressuring valuations of long-duration tech assets. The broader Nasdaq Composite is up 8% year-to-date, but the software sector has underperformed.
The immediate catalyst for FBN's reassessment is likely Zscaler's recent quarterly report, which showed a sequential slowdown in calculated billings growth. Management commentary pointed to elongated sales cycles for large transformation deals, a pattern also reported by peers like CrowdStrike and Palo Alto Networks. Enterprise customers are scrutinizing large-scale platform investments more heavily, leading to deferred decisions. This sales execution challenge, rather than competitive displacement, is the primary concern driving the target reduction.
The new $150 price target represents a 9.1% reduction from the previous $165 target. Zscaler's stock is currently trading at $130.64, having risen from its daily low of $126.46 to a high of $131.07 in today's session. The 4.01% intraday gain contrasts with a 6.2% decline over the past five trading sessions. The stock's 52-week range spans from $102.11 to $185.47, placing it near the midpoint of that band.
Zscaler's current market capitalization is approximately $19.5 billion, based on its outstanding share count. The stock trades at a forward price-to-sales ratio of 8.2x, a discount to its three-year average of 12.5x but a premium to the broader software index average of 6.5x. The cybersecurity peer group, including CrowdStrike and Palo Alto Networks, has seen an average forward P/S compression of 25% over the last twelve months. Zscaler's implied upside to the new target is 14.8%, which is below the sector median analyst implied upside of 22%.
| Metric | Before Revision | After Revision | Change |
|---|---|---|---|
| FBN Price Target | $165 | $150 | -$15 (-9.1%) |
| Implied Upside from $130.64 | 26.3% | 14.8% | -11.5 ppts |
| Consensus Target (Est.) | $162 | $158 (Est.) | -$4 |
The target cut signals a more cautious stance on cybersecurity growth rates, potentially pressuring the entire sector. Companies with similar exposure to large enterprise platform deals, like CrowdStrike (CRWD) and Palo Alto Networks (PANW), could see parallel estimate revisions. Pure-play network security vendors such as Fortinet may face greater scrutiny than diversified platform providers. The adjustment reflects a shift in investor focus from top-line growth to operating margin durability and free cash flow conversion.
A key limitation of this analysis is that a single price target revision may not indicate a broader sector trend. Zscaler's issues could be company-specific, related to its sales leadership turnover reported last quarter. A counter-argument is that the long-term shift to zero-trust architecture remains intact, and current headwinds are cyclical rather than structural. Positioning data shows hedge funds have been net sellers of software shares for three consecutive weeks, according to prime brokerage reports. Flow is rotating into value-oriented tech names with stronger near-term earnings visibility.
The next major catalyst for Zscaler is its Q4 fiscal 2026 earnings report, expected in early September 2026. Investors will monitor guidance for fiscal 2027 billings and revenue growth for confirmation of the slowdown thesis. The J.P. Morgan Global Technology Conference in mid-August may provide management commentary on demand trends. Key levels to watch include the 200-day moving average near $142, which now acts as resistance, and the $120 support level, which held during the March 2026 market correction.
Broader sector sentiment will be influenced by upcoming earnings from peers CrowdStrike (early July) and Palo Alto Networks (mid-August). Any deviation from their guidance trajectories will have amplified effects on Zscaler's multiple. The Federal Open Market Committee meeting on 17 June will impact the discount rate used for all growth stock valuations. A sustained move above the $135 level would challenge the bearish near-term technical setup, while a break below $125 could trigger further momentum selling.
A price target cut by a sell-side analyst is a revision of their estimated fair value for a stock, not a recommendation to sell. For retail investors, it provides insight into professional sentiment and changing financial models. The new $150 target from FBN Securities suggests they see limited near-term upside from the current $130.64 price. Investors should compare this target to the consensus analyst target, which aggregates views from over 30 firms, for a broader perspective. A single revision rarely dictates a stock's direction but can influence short-term trading.
Zscaler trades at a forward price-to-sales ratio of 8.2x, a significant discount to its peak valuation of over 25x P/S in 2021. However, it remains at a premium to its pre-pandemic average of around 6x and the current software sector median of 6.5x. This premium reflects its position as a pure-play leader in zero-trust network access, a high-growth segment. The compression in its multiple over the last two years mirrors the broader de-rating of unprofitable growth stocks as interest rates rose. Historical context is available on our analysis of software sector valuations.
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