KeyBanc raises CyberArk stock target, overweight on positive outlook

On Tuesday, KeyBanc Capital Markets exhibited confidence in shares of CyberArk Software (NASDAQ:CYBR) by raising its price target on the company's stock to $400 from the previous target of $355, while maintaining an Overweight rating.

The adjustment reflects a positive market sentiment towards CyberArk's prospects, particularly in the identity security sector. With a current market capitalization of $17.36 billion and trading near its 52-week high of $363, CyberArk has demonstrated strong momentum. InvestingPro analysis reveals the stock has delivered an impressive 51.49% return over the past year.

The raised target comes amid a series of favorable indicators for CyberArk. KeyBanc's analyst Eric Heath highlighted the strong emphasis on identity security as a high priority for businesses moving towards 2025. He also pointed out that channel feedback has been optimistic about CyberArk's ongoing momentum within the market.

Furthermore, the analyst noted that current consensus estimates for CyberArk's organic net new annual recurring revenue (NNARR) appear conservative, especially given the company's recent performance showing year-over-year growth of 12% and 16% in the last two quarters. This conservative estimate stands at a -1% year-over-year change, suggesting there may be room for positive surprises in upcoming reports.

InvestingPro data shows the company maintains impressive gross profit margins of 81.07% and has achieved revenue growth of 30.31% over the last twelve months. Subscribers to InvestingPro can access 15 additional key insights about CYBR's financial health and growth prospects.

CyberArk's acquisition of Venafi is another area where KeyBanc sees potential for significant upside. Although management has forecasted approximately 20% growth for Venafi by the end of 2025, KeyBanc believes this estimate to be very conservative.

The firm anticipates that there are substantial opportunities for cost synergies and has modeled a 17% growth in Venafi's ARR for 2025, albeit with caution regarding execution risks and the long-term sustainability of this growth.

The recent breach at BeyondTrust is mentioned as a potential tailwind for CyberArk, given the increased focus on security vulnerabilities. However, KeyBanc also cautions that foreign exchange rates could pose a headwind to reported annual recurring revenue and overall revenue figures, reflecting the impact of currency fluctuations on financial outcomes. This is in reference to management's previous comments about the challenges posed by the strengthening of the U.S. dollar against the British pound and the euro in the second quarter of 2022.

Overall, the sentiment around CyberArk is highly positive, with the stock having risen 8.9% since December 1, in contrast to the 4.2% decline in the iShares Expanded Tech-Software Sector ETF (IGV) over the same period.

KeyBanc's revised price target and continued Overweight rating underscore the firm's optimism regarding CyberArk's position and potential in the cybersecurity market. The strong analyst consensus of 1.39 reflects broad market confidence, though InvestingPro's Fair Value analysis suggests the stock may be trading above its intrinsic value.

For comprehensive insights and detailed financial analysis, investors can access CYBR's Pro Research Report, part of InvestingPro's coverage of over 1,400 US stocks.

In other recent news, CyberArk Software has seen several positive developments. A recent security breach at BeyondTrust, a competitor in the Privileged Access Management (PAM) market, has presented an opportunity for CyberArk.

Analyst firms such as Piper Sandler, DA Davidson, and Rosenblatt Securities have responded by increasing their price targets for CyberArk, maintaining a positive outlook for the company. CyberArk's recent acquisition of Venafi, a cybersecurity company, is expected to enhance its product offerings and contribute to its Annual Recurring Revenue (ARR).

In terms of financial performance, CyberArk posted a record total revenue of $240.1 million in the third quarter, marking a 26% year-over-year increase, and an ARR of $926 million, reflecting a 31.3% growth. For the fourth quarter, the company anticipates revenue to range between $297 million and $303 million, surpassing the consensus estimate of $259.7 million.

Finally, CyberArk announced a change in its financial leadership, with CFO Josh Siegel stepping down after a 13-year tenure, to be succeeded by Erica Smith. These are the recent developments in CyberArk's operations.

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