ZS Should I Buy
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Buy now for a tactical entry: ZS is sitting right on first support (~199.97) after a sustained pullback (bearish MA stack), with short-term momentum washed out (RSI_6 ~28) and still-positive MACD histogram. Sentiment is mixed but not risk-off (options volume skew is call-favoring), while recent product/news flow is supportive (AI security launch). Wall Street remains broadly constructive despite recent price-target cuts. For an impatient buyer, current pricing near support offers a better entry than chasing rebounds toward 212–224 resistance.
Price/Trend: The broader trend is still bearish (SMA_200 > SMA_20 > SMA_5), indicating the stock has been in a downtrend. Momentum: MACD histogram is positive (0.476) but contracting—bullish momentum exists but is fading. RSI_6 is 28.25, signaling a short-term oversold/washed-out condition that often precedes a bounce. Levels: ZS is trading essentially at S1 (199.97). A clean hold here favors a rebound attempt toward the pivot (212.01) and then R1 (224.06). A failure to hold support increases risk of a quick move toward S2 (~192.53). Pattern odds provided: +0.41% next day, +3.76% next week, ~-0.4% next month—near-term bounce potential, but the 1-month outlook remains choppy.
Product/news catalyst: Shares recently reacted positively to the launch of AI-powered cybersecurity tools addressing vulnerabilities in corporate AI systems (supports narrative of ZS as an enterprise AI security beneficiary).
Fundamental growth: FY2026 Q1 revenue up ~25.5% YoY, reinforcing durable top-line momentum.
Street stance: Majority of recent notes keep Outperform/Overweight-type ratings; Mizuho upgrade cited valuation as attractive after the selloff.
Setup: Price is at first support with an oversold short-term RSI, improving odds of a near-term rebound.
Trend still down: Bearish moving-average structure (SMA_200 > SMA_20 > SMA_
means rallies can get sold until trend repairs.
Profitability questions: News highlights a path to profitability by 2027 requiring high growth; latest quarter still shows a net loss and EPS decline YoY.
Analyst target cuts: Multiple firms (RBC, Piper, Morgan Stanley) recently lowered price targets, reflecting tempered near-term expectations.
Options imply uncertainty: Very high IV percentile suggests the market is pricing meaningful move risk.
Latest quarter (FY2026/Q1): Revenue grew to $788.1M (+25.5% YoY), showing strong demand/growth durability. Profitability remains pressured: Net income was -$11.6M (loss widened slightly YoY), EPS -$0.07 (down ~12.5% YoY). Gross margin slipped to ~76.56% (down ~1.17% YoY), a mild deterioration but still high for software. Overall: strong growth, but margins/earnings are not yet inflecting positively—this keeps the stock sensitive to guidance and execution. Next key event: earnings on 2026-03-02 (after hours).
Recent trend: Ratings are still broadly positive (multiple Outperform/Overweight/Buy), but price targets have been trimmed into early 2026 (e.g., RBC to $290 from $366; Piper to $260 from $280; Morgan Stanley to $305 from $335). Offsetting that, Mizuho upgraded to Outperform (PT $310) on valuation, and several firms highlighted strength in emerging products/Zero Trust momentum (e.g., JPMorgan, Baird). Wall Street pros: category leadership in zero-trust/cyber platform, solid ARR/revenue growth, and AI-security product tailwinds. Wall Street cons: uncertainty around organic growth vs acquisition contribution, high expectations/valuation sensitivity, and a not-yet-complete profitability story.
Influential/political trading: No recent congress trading data available; hedge funds and insiders show neutral recent activity.
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