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Investing.com - RBC Capital downgraded CyberArk Software (NASDAQ:CYBR) from Outperform to Sector Perform while raising its price target to $448.00 from $420.00 following the announcement of the company’s acquisition by Palo Alto. The stock has shown impressive momentum, surging nearly 16% in the past week and trading close to its 52-week high of $452.
The downgrade comes after CyberArk announced it is being acquired by Palo Alto in a cash-and-stock transaction valued at approximately $25 billion based on the unaffected stock price. Both companies’ boards have approved the deal. With robust gross profit margins of 78% and revenue growth of 35% over the last twelve months, InvestingPro analysis shows CyberArk’s strong operational performance has attracted strategic interest.
RBC Capital analyst Matthew Hedberg noted the strategic rationale for Palo Alto to further consolidate the cybersecurity landscape with best-in-class identity solutions from CyberArk, but does not anticipate another bidder emerging given the size of the transaction.
CyberArk also pre-released its Q2/25 results, which exceeded expectations according to RBC. The company will forgo its previously scheduled earnings call on August 7.
The price target increase to $448.00 reflects the acquisition value, while the rating downgrade to Sector Perform indicates RBC’s view that the stock has limited upside potential beyond the agreed acquisition price.
In other recent news, CyberArk Software is set to be acquired by Palo Alto Networks (NASDAQ:PANW) in a transaction valued at approximately $25 billion. This deal involves a mix of cash and stock, with CyberArk shareholders receiving $45 per share in cash plus 2.2005 shares of Palo Alto Networks stock for each CyberArk share. Following the announcement of this acquisition, several analyst firms have downgraded CyberArk’s stock rating. Piper Sandler, UBS, Guggenheim, BTIG, and William Blair all downgraded the stock to a Neutral rating, citing the acquisition as a key factor. Piper Sandler and UBS raised their price targets slightly, while Guggenheim removed its price target altogether. The acquisition is seen as a strategic move by Palo Alto Networks to enhance its platform strategy by integrating CyberArk’s capabilities. The deal is structured such that its value is heavily influenced by Palo Alto Networks’ stock performance, with 90% of the deal value tied to it.
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