Zscaler's Cybersecurity Challenges Reflect Poor Annual Revenue Forecasts
Zscaler Shares Experience Significant Decline
Zscaler shares experienced a sharp decline of 15.2% in premarket trading Wednesday, driven by the cybersecurity firm's dismal annual forecasts. As the company anticipates full-year revenue between $2.60 billion and $2.62 billion, analysts had estimated a target of $2.63 billion. This disparity has led to a potential loss of more than $4 billion from Zscaler's market valuation of $29.2 billion.
Industry Repercussions and Analyst Insights
Despite Zscaler's predictions, the cybersecurity sector shows a spectrum of forecasts. Peers like Palo Alto Networks and SentinelOne have raised their annual revenue expectations, potentially increasing competition for Zscaler. Analyst Catharine Trebnick from Rosenblatt Securities pointed out that contracted billings are anticipated to grow by 7% in 1H2025. However, this reflects a historically lower growth rate attributed to past macroeconomic challenges.
Analyst Reactions and Future Outlook
In light of the grim outlook, several brokerages, including Bernstein, who suggested a possible increase in demand owing to better sales effectiveness, have adjusted their price targets for Zscaler shares. The median price target now sits at $220, a decrease from $224 from August.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.