Piper Sandler Downgrades Zscaler (XTRA:0ZC)

Piper Sandler downgraded Zscaler (XTRA:0ZC) to Neutral on May 30, 2025, with analyst price forecasts suggesting a 10.28% downside from the latest closing price of 241,30 €/share. Despite the downgrade, institutional ownership in Zscaler has increased, with total shares owned rising by 9.94% in the last three months, and projected annual revenue is expected to increase by 3.03% to 2,624MM.

Analysis

Zscaler (XTRA:0ZC) experienced a ratings downgrade from Overweight to Neutral by Piper Sandler on May 30, 2025, with the average one-year analyst price target as of May 7, 2025, at 216,49 €/share, suggesting a potential 10.28% downside from its latest closing price of 241,30 €/share. Despite this specific analyst revision, Zscaler projects a 3.03% increase in annual revenue to 2,624MM and an annual non-GAAP EPS of 2.64. In contrast to the downgrade, institutional sentiment appears to be strengthening, as evidenced by a 1.58% increase in the number of funds reporting positions to 1,285 in the last quarter. Total shares owned by institutions also rose by 9.94% to 92,975K shares in the last three months, and the average portfolio weight of all funds dedicated to Zscaler increased by a significant 74.89% to 0.25%. Examining specific holders, Invesco Qqq Trust increased its share count by 1.45% and its portfolio allocation by 19.71%, American Century Companies increased shares by 2.57% and allocation by 20.58%, and VTSMX increased shares by 0.72% and allocation by 15.56%. However, Ubs Asset Management Americas and Goldman Sachs Group, while increasing their share counts by 16.85% and 12.72% respectively, substantially decreased their portfolio allocations in 0ZC by 80.40% and 66.71% respectively, indicating a nuanced institutional landscape where some large holders are increasing positions but reducing relative exposure.

Key Decisions for Investors

• Investors should carefully evaluate the conflicting signals of Piper Sandler's downgrade and downside price target against the backdrop of increasing overall institutional ownership and Zscaler's modest positive revenue and EPS projections.
• Monitor upcoming earnings releases and further analyst commentary to gauge if the company's growth trajectory can support its current valuation, especially in light of the analyst-projected downside.
• Note the divergent behavior among large institutional investors, where increased shareholdings are, for some, coupled with significant reductions in portfolio allocation, potentially signaling valuation concerns or strategic portfolio rebalancing rather than outright bearish sentiment.