Zscaler price target lowered to $160 from $220 at KeyBanc

KeyBanc analyst Eric Heath lowered the firm’s price target on Zscaler (ZS) to $160 from $220 and keeps an Overweight rating on the shares. The firm says survey results and checks from 36 IT & security channel partners were mixed for Q1 amid a dynamic environment with elevated component pricing, geopolitical uncertainty, and AI disruption. Positively, the overall meets/beats improved to 88% from 81% as the net impact of component pricing caused pull-forward of demand, particularly in server, storage, and networking, and the outlook for public cloud slightly improved. However, 2026 budget outlook moderated to 2.5% from 5.3% last quarter, U.S. Fed results for Q2 and FY26 outlook weakened, and nearly 20% of partners are seeing a reduction in software spend in favor of AI-natives, says KeyBanc.