Zscaler (ZS) stock fell 8% as BTIG downgraded its competition risk rating

TLDR

• Zscaler (ZS) stock fell about 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 indicated increasing competition from Cloudflare and Netskope
• The price of ZS is now down 39% year to date and 56% over the past six months
• BTIG lowered its FY2027 ARR estimate to $4.355 billion, below the Street consensus of $4.447 billion.

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Zscaler stock fell nearly 8% on Wednesday, April 9, hitting a 52-week low of $127.88. The selling came after BTIG analyst Gray Powell downgraded the stock from buy to neutral and pulled it from the company’s top picks for the first half of 2026.

Zscaler, Inc., ZS

The reduction was driven by field checks with five industry contacts over the past week. While near-term demand appears stable, feedback over the next six to 12 months has been cautious across most communications.

BTIG cited increased competition as the key issue. Cloudflare and Netskope were named as the most pressing threats. Firewall vendors have also been called on to do a better job enhancing their SASE capabilities to existing customers, making it difficult for Zscaler to win additional business.

The company said that the story of the Zscaler platform is not going as expected six months ago.

BTIG cuts revenue forecasts

BTIG has revised its revenue model for fiscal 2027, and now expects annual recurring revenue of $4.355 billion, up 16.5% year-on-year. This is below its previous estimate of $4.391 billion and below the Wall Street consensus of $4.447 billion.

The stock is now trading down 39% year to date. This compares to a 24% decline across BTIG’s wider coverage universe over the same period. The six-month decline is 56%.

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

Cantor Fitzgerald maintained his overweight classification thereafter Zscaler Reported strong results for the second quarter of fiscal 2026. The company beat estimates for revenue, average annualized revenue, earnings per share and free cash flow, and raised its full-year guidance across key metrics.

Other recent developments

Freedom Capital Markets maintained a Buy rating but lowered 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, indicating growth for the platform and stability of the underlying business.

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

Evercore noted that the new Anthropic Claude Mythos modelwhich focuses on cybersecurity missions, could put additional pressure on cybersecurity stocks, including Zscaler.

At the time of writing, ZS had a market capitalization of $22.17 billion. The average daily trading volume is about 2.75 million. The technical sentiment signal is currently rated as Sell.

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