Is it time to cash out of Zscaler?

Roth Capital Partners analyst Taz Koujalgi says feedback from Zscaler’s (Zscaler Stock Quote, Chart, News, Analysts, Financials NYSE:ZS) ZenithLive conference was positive on the company’s core products, but more mixed on some newer offerings and its AI security tools.

In a June 12 update, Koujalgi maintained his “Neutral” rating and $215.00 target on Zscaler. His target is based on 10 times his calendar 2026 EV/sales estimate, below the peer group median, reflecting his concerns about competition in the SASE market.

Koujalgi said customer feedback on Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA) was mostly positive, though some customers cited latency with ZIA and dropped connections with ZPA.

“When we asked if customers were using ZPA for a subset of ZIA users, we were told by most customers that ZPA was being used by all users since almost all users were hybrid workers and needed remote access,” Koujalgi said.

Feedback on Zscaler Digital Experience was more mixed. Koujalgi said one partner described ZDX as not yet mature, while some customers said they did not plan to renew after trials or existing deployments. Feedback on Zscaler Branch Connector was also mixed, with some customers planning deployments and others having no near-term plans.

Koujalgi said customer interest in AI security tools was strong, but he did not meet customers already using Zscaler’s AI Protect. One partner said the product was not very mature until recently and had lost a competitive evaluation to Prompt Security, which was acquired by SentinelOne. Partners also cited Palo Alto Networks’ Prisma AIRS and private vendors including Onyx, Noma, WitnessAI, Zenity and Jetstream as products being evaluated.

“Feedback on the competitive landscape was fairly consistent with most partners saying that Netskope remains the primary competitor in bake-offs and POCs followed by Palo Alto Networks,” Koujalgi said.

Partners remained positive on Zscaler’s competitive positioning and said it generally lost deals when competitors reduced pricing. Koujalgi said partners did not see pricing pressure worsening, but did say the competitive landscape has become tougher in recent quarters.

The analyst said most partner deals remain upsells to existing customers, while new-logo activity has been relatively flat for the past few years.

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