One of the standouts of today's afternoon trading session has been Zscaler, which logged a -1.9% drop and underperformed the S&P 500 by -2.0%. The Data Processing Services stock is now trading at $148.82 per share and is -19.29% below its average target price of $184.39. Analysts have set target prices ranging from $145.0 to 254.0 dollars per share, and have given the stock an average rating of buy.
For the greater market's outlook on the stock, we can use Zscaler's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 6.5% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding Zscaler by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 49.4%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
Overall, there is positive market sentiment towards Zscaler because of an analyst consensus of some upside potential, a buy rating, an average amount of shares sold short, and only a small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about ZS:
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It has trailing 12 month earnings per share (EPS) of $-1.35 per share
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Zscaler has a trailing 12 month Price to Earnings (P/E) ratio of -110.2 while the S&P 500 average is 15.97
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The company has a Price to Book (P/B) ratio of 30.2 in contrast to the S&P 500's average ratio of 2.95
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Zscaler is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively
