One cybersecurity stock has lagged of late. Jay Woods says the charts are now turning bullish

Zscaler is highlighted as a potential cybersecurity-sector catch-up trade after falling as much as 65% from its 52-week high and remaining down 13% year to date, while leading peers CrowdStrike, Fortinet, Okta and Palo Alto Networks have gained more than 100%. Technical analysis points to an upward resolution of a double-bottom and downtrend break above $195, with support near $165 at the converging 50- and 200-day moving averages. The cited upside target is $250-$265, implying roughly 25%-30% potential appreciation, while a recovery to $225 would return shares to breakeven for 2026.

Analysis

The relevant question for ZS is whether its relative underperformance reflects a temporary growth-reset discount or durable share loss in secure-access service edge (SASE). A technical breakout alone does not resolve that distinction: ZS needs reacceleration in billings/RPO and evidence that large-account platform consolidation is not favoring PANW. If these metrics inflect over the next one to two earnings prints, ZS has meaningful operating leverage because incremental subscription growth can expand margins without the hardware and channel constraints faced by FTNT.

A sector-wide move higher is increasingly fragile after large gains in leaders. CRWD and PANW remain better fundamental beneficiaries of expanding security budgets, but their premium multiples leave them more exposed to even modest billings deceleration; ZS offers a cleaner catch-up vehicle only if estimates have stopped falling. FTNT is the likely loser if spending continues shifting toward cloud-delivered zero-trust architectures, while OKTA remains a higher-risk identity-security turnaround rather than a direct read-through on ZS.

Near term, momentum and systematic flows can support a continuation move over days to weeks, but the 1-3 month catalyst is fundamental: enterprise net-new customer additions, federal/large-deal commentary, and FY guidance. The thesis is falsified by another guidance cut, flat-to-down RPO growth, or sustained underperformance versus PANW despite a favorable software tape. Over 6-18 months, AI-related security demand is supportive, but platform bundling by hyperscalers and PANW could compress standalone-vendor pricing and terminal multiples rather than lift all cyber names equally.

Contrarianly, the perceived laggard opportunity may be less about a broad cyber rotation and more about short-covering into a crowded sector. Do not extrapolate chart targets into earnings without confirmation that ZS is winning share; absent that, the stock can rerate only temporarily while PANW compounds through bundle economics.

Key Decisions for Investors

• Initiate a 1-3 month long ZS / short PANW pair only on confirmation that ZS holds above its recent breakout area and relative performance versus PANW improves; target 10-15% relative upside, with exit on a ZS guidance reset or 8% relative drawdown. This isolates a catch-up rerating from broad cyber beta.
• For outright exposure, buy ZS in tranches near the cited $165 support zone rather than chase momentum; use a close below that level as technical invalidation. Target a return toward $225 only if next-quarter billings and RPO show stabilization; risk is a renewed fundamental de-rating.
• Maintain core long CRWD or PANW rather than rotate wholesale into laggards before earnings. Reduce exposure if either reports material billings deceleration, since premium-multiple cyber leaders could correct sharply even if sector demand remains intact.
• Set an earnings watch item for ZS: require improvement in large-enterprise deal activity, remaining-performance-obligation growth, and FY revenue/billings guidance. If those are absent, avoid long options and treat any rally as flow-driven rather than a durable reacceleration.