Zscaler (ZS) shares will be under pressure after its Q4 revenue guidance came in relatively light versus Street expectations amid a good Q3 performance, Wedbush said in a Wednesday note.

The report also said fiscal 2027 guidance implies 700 basis points deceleration in annual recurring revenue.

Still, the note said Zscaler is well-positioned to be an AI winner with Zero Trust and AI security gaining traction with enterprises.

"ZS need to show better execution to get out of the investor penalty box," the report said.

Wedbush cut its price target to $220 from $300 to reflect a lower multiple while keeping its outperform rating on the stock.

Price: 126.19, Change: -58.42, Percent Change: -31.64