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Wednesday, Canaccord Genuity analysts adjusted their outlook on Qualys stock (NASDAQ: QLYS), reducing the price target to $158 from $163, while retaining a Buy rating. The adjustment reflects a valuation pegged to 18 times the projected calendar year 2026 free cash flow, considered appropriate for a company with a solid cybersecurity platform and potential for mid-teens free cash flow growth in the coming years. According to InvestingPro data, Qualys currently trades at a P/E ratio of 27.05 and shows an impressive financial health score of "GREAT."
Qualys has been effectively executing its strategy despite a temporary softness in demand within the vulnerability management sector. The company’s growth is supported by increased contributions from channel partnerships, expansion of high-spending platform customers, and the emergence of new growth drivers. These include the sale of Cloud-Native Application Protection Platform (CNAPP) capabilities, TruRisk, and TotalAI products. The company maintains strong fundamentals with an impressive gross profit margin of 81.65% and holds more cash than debt on its balance sheet, as revealed by InvestingPro analysis.
In 2024, Qualys secured significant contracts within the Federal market. Looking ahead, the company is optimistic about the Federal sector, especially with multiple products soon expected to receive FedRAMP High certification. This certification is seen as a positive development for the segment, potentially leading to increased business opportunities. With revenue growth of 9.58% in the last twelve months and management actively buying back shares, the company demonstrates strong operational execution. Discover more insights about Qualys’s growth potential in the comprehensive Pro Research Report, available exclusively on InvestingPro.
The company’s financial guidance for the fiscal year 2025 takes into account additional investments aimed at capitalizing on federal opportunities. Qualys’ strategic focus and anticipated certifications are poised to serve as catalysts for the company’s growth in the cybersecurity domain. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading below its fair value, suggesting potential upside for investors.
In their commentary, Canaccord Genuity analysts highlighted Qualys’ performance and future prospects: "As Qualys gains more leverage from channel partnership contributions, ramps its higher-spending platform customers, and budding growth drivers in selling CNAPP capabilities, TruRisk, and TotalAI, we see a pathway for improving growth next year." The analysts underscored the importance of the Federal market wins and the upcoming certifications in shaping the company’s trajectory.
In other recent news, Qualys Inc (NASDAQ:QLYS). reported impressive first-quarter 2025 earnings, with an earnings per share (EPS) of $1.67, surpassing the forecasted $1.47. The company’s revenue reached $159.9 million, exceeding expectations of $157.11 million. Despite the positive earnings results, DA Davidson maintained a Neutral rating for Qualys with a $130 price target. The firm noted a slowdown in the growth of Qualys’ Core Customer Base to 7% year-over-year, compared to 13% in the previous quarter, primarily due to invoice timing issues.
Qualys also revised its revenue guidance for the second to fourth quarters down by approximately $1.5 million at the midpoint, citing increased deal scrutiny. However, the company’s guidance for EPS, EBITDA, and free cash flow for the year was raised, indicating strong financial performance. The firm’s expectations for Core Customer Base growth in calendar year 2025 remain at 6-8% year-over-year, although there is a possibility it could be slightly lower. Qualys is also focusing on expanding its channel partnerships and international revenue, which saw a notable 16% growth.
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