Zscaler downgraded at Morgan Stanley amid near-term security caution

As previously reported, Morgan Stanley analyst Hamza Fodderwala downgraded Zscaler to Equal Weight from Overweight with a price target of $120, down from $162. While stating that cybersecurity remains a top priority in 2023 and "by far the least likely area of IT spend to be cut relative to other categories," Fodderwala argues that the group is now in the early innings of negative estimate revisions that have lagged broader software by about two quarters. Checks "meaningfully downticked" in October and those checks have largely gotten worse since then, said Fodderwala, who is lowering estimates across the firm’s security coverage and downgraded three names in the space.