Zscaler (ZS.US) stock plunges after announcing better-than-expected performance and guidance. Investment bank Wedbush is backing it up, giving it an "outperform" rating.

After announcing better-than-expected performance and guidance, the stock price of the cybersecurity company Zscaler (ZS.US) plummeted over 13% on Wednesday, but Wedbush Securities said its performance was "strong" and gave it an "outperform" rating with a target price of $350. Analyst Dan Ives and his team at the firm stated, "Zscaler reported first-quarter fiscal 2026 results, with revenue and profit surpassing expectations. They also raised their fiscal year 2026 performance expectations across the board due to the continued strong momentum from their new cloud and AI solutions, demonstrating robust demand for the company's product portfolio in the market." They continued, "Overall, we still view Zscaler as a top player in the cybersecurity industry, as it maintains a very favorable position in the process of enterprises transitioning to zero trust/AI security." For the quarter ending on October 31, Zscaler's adjusted earnings per share were $0.96, with revenue increasing by 26% year over year to $788.1 million. Analysts had previously expected adjusted earnings per share of $0.86 and revenue of $773.86 million. Looking ahead, Zscaler expects second-quarter revenue to be between $797 million and $799 million, higher than the market's general expectation of $796.1 million. The company anticipates second-quarter adjusted earnings per share to be between $0.89 and $0.90, essentially in line with the market's expectation of $0.89. Full-year revenue is forecasted to be between $3.28 billion and $3.3 billion, higher than the previous estimate of $3.27 billion. Full-year adjusted earnings per share are expected to be between $3.78 and $3.82, exceeding the previous estimate of $3.65.