Piper Sandler Downgrades Zscaler Outlook to Neutral

Piper Sandler has downgraded Zscaler from Overweight to Neutral, impacting investor sentiment. The report shows an increase in institutional ownership, reflecting mixed reactions from the investment community.

Date: 31-05-2025

AI Rating: 5

Institutional Ownership and Downgrade Insights
The recent downgrade of Zscaler by Piper Sandler from Overweight to Neutral indicates a shift in analyst sentiment that could lead to a decline in share price in the short term. This downgrade could lead to negative investor sentiment as a more cautious outlook might prompt some investors to reevaluate their positions.

However, the report shows an increase in institutional ownership as 20 new funds reported positions in Zscaler, representing a 1.58% growth in the last quarter. Notably, the overall fund weight allocated to Zscaler has increased by 74.87%, signaling sustained confidence from significant institutional investors despite the downgrade. The total shares owned by these institutions increased by 11.50% to 92,975K shares, indicating that institutions remain committed to the stock.

The sustained investments from key institutional holders such as Invesco and American Century Companies, who have increased their holdings, suggest that some segments of the investment community perceive long-term value in Zscaler despite the near-term downgrade. This mixed attitude among institutional shareholders could lead to volatility but also signals a possible consolidation phase rather than a significant downturn in stock value.

In conclusion, while the downgrade and mixed sentiment could temporarily affect the stock price negatively, the increase in institutional investment could buffer against steep declines, possibly supporting a rebound if Zscaler can deliver on its growth metrics in the upcoming quarters.

Stocks: ZSCA