capital · May 20, 2026
Morgan Stanley Cites Red Canary Integration Concerns in Zscaler Downgrade
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Morgan Stanley downgraded Zscaler citing limited platform expansion beyond ZIA and ZPA, modest traction from the Red Canary acquisition, and intensifying SASE competition. Zscaler reported Q2 2026 results with the Red Canary acquisition completed as part of deals totaling $692 million. Analysts observed slower-than-hoped traction from the Red Canary deal in recent field checks. Morgan Stanley noted ZDX achieving $100 million in annual recurring revenue despite the integration concerns.
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