Zscaler Stock Topples to 52-Week Low Despite Quarterly Strength

Zscaler stock plummeted to its lowest level this year after two consecutive reports highlighting the stock's drop. Despite strong Q2 performance, the ZS stock has reached its year-to-date low due to recent negative headlines. Analysts may recommend buying the dip in Zscaler stock due to potential revenue growth opportunities.

ZS stock dropped 8% to hit a 52-week low of $140.56 on March 24, despite reporting Q2 fiscal 2026 results that exceeded expectations on both the top and bottom lines. Revenue came in at $815.8 million, a 26% year-over-year increase that topped the Street's $798 million estimate, while non-GAAP EPS of $1.01 beat the $0.89 consensus.

The disconnect between strong fundamentals and weak price action has puzzled investors. Multiple analysts cut price targets following the report, though the company maintains a robust 77% gross profit margin and annual recurring revenue grew 25%. Wells Fargo initiated coverage with an Overweight rating and a $200 price target, arguing the selloff has created a compelling entry point.

For Q3 FY2026, Zscaler guided for revenue of $834-$836 million and EPS of $1.00-$1.01, both marginally above consensus. The stock's weakness appears driven by broader rotation out of high-multiple cybersecurity names rather than company-specific concerns. Investors will be watching whether the adoption of Zscaler's newer platform capabilities can reaccelerate growth and restore market confidence.