ZS and PD are seeing price-target cuts after the companies' lackluster guidance
Two cloud-related stocks are putting pressure on the sector today. Zscaler Inc (NASDAQ:ZS) and PagerDuty Inc (NYSE:PD) are down 16% and 1.5%, respectively, after each company's rather lackluster turn in the earnings confessional.
ZS was last seen trading at $161.78, on track for its worst single-session percentage decline since September 2019. Even though the cloud security company reported a top-line beat for the fiscal fourth quarter, its full-year and first-quarter guidance fell short of analyst estimates. The shares are trading at their lowest level since May 30, and are 27% lower in 2024.
In response, 11 brokerages issued price-target cuts, the worst coming from Mizuho to $195 from $210. More adjustments could weigh on the equity, especially considering 28 of the 38 analysts covering Zscaler maintain a "buy" or better rating, with zero "sells" on the books.
PagerDuty also reported an earnings beat, but second-quarter revenue whiffed on estimates and the incident management platform reduced its full-year guidance. PD earlier traded as low as $16.46, a four-year bottom, and is now off by 22.7% year-to-date.
No fewer than seven brokerages chimed in with price-target cuts, the steepest coming from Baird to $18 from $22. Similar to ZS, there's not a single "sell" rating on PagerDuty stock, so there's significant downgrade risk going forward.