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On Tuesday, RBC Capital Markets adjusted its outlook on CyberArk Software (NASDAQ:CYBR), increasing the price target to $410.00, up from the previous $385.00, while reiterating an Outperform rating on the shares.
The adjustment reflects a strong market position in identity security and the potential for the company to surpass fourth-quarter expectations.
Anaysts at RBC Capital noted the positive market checks and the potential for CyberArk's recent acquisition of Venafi to enhance margins and accelerate annual recurring revenue (ARR) growth over time.
Despite anticipating conservative initial guidance for the calendar year 2025 to allow for integration risks, Hedberg expressed confidence in a starting point of over 20% year-over-year ARR growth.
The analysts anticipate "reasonable upside to ARR vs. consensus of $1,158.1M, +49.6% y/y, which calls for NNARR of $232.1M, +236.3% y/y (inflated due to the Venafi acquisition)."
They observed "the average ARR beat over the last 4 quarters is 0.9%, which has been relatively consistent. "
The firm noted that CyberArk has consistently outperformed ARR expectations by 0.9% over the last four quarters, suggesting the potential for Q4 ARR to reach approximately $1,168.5 million, or a 51.0% growth.
The price target hike to $410 is based on a 15x multiple of the estimated enterprise value to sales (EV/S) for the calendar year 2025, an increase from the previous 14x multiple.
This change is attributed to the expansion of peer multiples, indicating a more favorable market valuation for companies in CyberArk's sector.
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