On Friday, CyberArk Software (NASDAQ:CYBR) shares saw their price target adjusted by BTIG, with the firm setting a new target of $296, down from the previous $317, while maintaining a Buy rating on the stock.
The cybersecurity company reported a modest outperformance in its Q1 results, with annual recurring revenue (ARR) reaching $811 million, marking a 34% year-over-year increase. This figure slightly surpassed BTIG's projection of $813 million and the Street's $808 million.
CyberArk's operating income, earnings per share (EPS), and free cash flow (FCF) exceeded expectations, with the company revising its 2024 ARR outlook to $982.5 million, a 27% year-over-year increase, which is a slight improvement from the previously forecasted $975.5 million. This update aligns closely with BTIG's and the Street's estimates.
The firm acknowledged that while investor expectations were high prior to the earnings release, the overall report was positive. Despite a desire for greater Q1 upside, the analyst noted that demand trends for CyberArk appear robust.
The company's 9% year-over-year growth in net new ARR was highlighted as a strong performance, especially when compared to other firms in the cybersecurity sector that are seeing flat or declining revenue additions.
The analyst also found CyberArk's market share gains and potential improvements in win rates within its Secrets Management segment to be promising. Additionally, CyberArk's Workforce Identity and Access Management (IAM), which constitutes around 10% of the ARR, is reportedly performing well.
The significant uplift in FCF guidance, now at $120 million compared to the previous $90 million, is believed to be undervalued in the current market.
Minor adjustments were made to BTIG's growth forecasts for CyberArk, now estimating an ARR of $987 million for 2024 and $1,217 million for 2025, compared to the previous forecasts of $982 million and $1,207 million, respectively.
The downward revision of the price target to $296 per share from $317 is attributed to a more conservative multiple assumption, but the firm reaffirmed its Buy rating on the stock.
InvestingPro Insights
For investors looking to delve deeper into CyberArk Software's financial health, recent data from InvestingPro provides a nuanced picture. The company's market capitalization stands at a robust $9.88 billion, reflecting its significant presence in the cybersecurity industry. Despite a negative P/E ratio of -382.78, analysts are optimistic, anticipating net income growth this year, which could signal a turnaround for the company's profitability. This is further supported by the prediction that CyberArk will be profitable within the year, indicating potential for future earnings improvement.
CyberArk's gross profit margin impresses at 79.51%, underscoring the company's ability to maintain a high level of profitability in relation to its sales. This substantial margin dovetails with the firm's reported 34% year-over-year increase in annual recurring revenue, reinforcing the company's strong financial performance. However, the company is currently trading at a high Price/Book multiple of 12.47, which investors might see as a premium for its market position and future growth prospects.
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