ZS Zscaler, Inc.

Price Chart

Executive Summary

Morgan Stanley double-downgraded Zscaler (ZS) from Overweight to Equal-Weight and slashed its price target 22.5% to $155, the lowest on the Street. The call is sharply contrarian to a consensus where 81% of 58 analysts rate the stock a Buy or Strong Buy, with a mean target of $223 — implying 30% upside from current $171. The firm’s 57% accuracy (7 calls) and average 0.8% return place it in the above-average tier, though several peers boast 70%+ hit rates. Near-term EPS estimates have seen 40 upward revisions in the past 30 days, while the stock carries a high short interest of 55% — factors that may push back against the bearish thesis. Insider sales totaling ~$1.4M in March align with the downgrade, but insider sales are a weak standalone signal. With earnings due May 26, the timing adds pressure for any catalyst to validate or refute the call. Bottom line: Morgan Stanley’s bearish outlier stance creates a contrarian opportunity for traders, but the consensus divergence and positive estimate momentum warrant caution for speedy execution.

Impact Score

Consensus & Targets

Consensus is heavily skewed bullish: 15 Strong Buy, 32 Buy, 11 Hold, 0 Sell — that's 81% Buy (47 of 58 analysts). The average rating is between Buy and Overweight. Morgan Stanley's Equal-Weight call sits well below the consensus, making it a notable outlier.

Current price $171.01. Mean target $223.39 (upside 30.6%), median $210, high $330, low $155. Morgan Stanley's $155 is the absolute floor, 31% below the mean. The prior target was $200, so the cut is steep and places MS far below even the median.

Recent Analyst Activity

30-day analyst activity shows 1 upgrade (B. Riley: Neutral → Buy on May 18) and 0 downgrades beyond MS's move. EPS revisions are strongly positive near-term: 40 upward revisions vs 0 downward on the current quarter (0q) over the last 30 days. Forward-year revisions are more mixed (2 up, 2 down). Estimate momentum contradicts the bearish call.

Firm Track Record — Morgan Stanley

Morgan Stanley accuracy: 55% on 4993 calls | avg return: 4.3%

Industry benchmark: mean 51% ± 11%. Top tier: ≥61% (mean + 1σ). Based on 15 firms with ≥5 scored calls.

Morgan Stanley has a 57% accuracy rate on 7 calls on ZS, with an average return of 0.8% — above average among covering firms but not elite. Top firms by accuracy: Stephens & Co. (100%, 3 calls, avg return +19.8%), Truist (100%, 2 calls, +1.9%), Loop Capital (80%, 5 calls, +10.8%). Worst performing: Bernstein (67%, 3 calls, -18.5%) and Mizuho (64%, 11 calls, -2%).

Earnings Estimates

Next earnings: May 26, 2026

Cross-Platform Signals

Insider trading: 5 sells in March totaling ~$1.4M by executives (Geller, Rich, Chaudhry, Rubin, Beer) — aligns with bearish signal but magnitude is small, not a predictive cluster. No insider buys. Congressional trades: none. Institutional changes: Two Sigma trimmed 63.9%, BAC trimmed 52.9%, UBS trimmed 49.8%, but Morgan Stanley's own asset management added 25.4% — mixed signals. Short interest is elevated at 55.1% of float, indicating heavy bearish positioning. The analyst downgrade converges with high short interest and insider selling, but diverges from strong upward estimate revisions.

Documents Analyzed

Report based on filing metadata.

US Market Status