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Investing.com - Palo Alto Networks (NASDAQ:PANW) stock fell approximately 6% after the company confirmed its acquisition of CyberArk (NASDAQ:CYBR) for about $25 billion in cash and stock. CyberArk, with its impressive 78% gross profit margin and annual revenue of $1.1 billion, appears overvalued according to InvestingPro Fair Value calculations.
The cybersecurity giant’s CEO Nikesh Arora stated that CyberArk will "allow us to accelerate our platformization by adding a net new platform for identity security... allowing us to be the cybersecurity company that provides the most comprehensive set of platforms across the industry."
CyberArk shares traded relatively flat following the announcement, after having risen approximately 13% during the previous session when The Wall Street Journal first reported the potential deal.
Palo Alto Networks had already declined about 5% during the previous session after the initial WSJ report before the official confirmation triggered the additional 6% drop.
Year-to-date, CyberArk stock is up approximately 30% while Palo Alto Networks shares have gained about 1%, compared to the Russell 3000 index which has risen approximately 8% during the same period.
In other recent news, Palo Alto Networks announced a definitive agreement to acquire CyberArk Software (ETR:SOWGn) for approximately $25 billion in a cash and stock transaction. This acquisition is intended to enhance Palo Alto Networks’ platform offerings by adding a new identity security platform. Following the announcement of the acquisition, several financial analysts have adjusted their ratings for CyberArk Software. RBC Capital downgraded CyberArk from Outperform to Sector Perform, raising its price target to $448.00. Piper Sandler also downgraded CyberArk from Overweight to Neutral, citing the acquisition as a compelling addition to Palo Alto’s portfolio. UBS followed suit by downgrading CyberArk from Buy to Neutral, slightly increasing its price target to $485.00. Guggenheim also downgraded CyberArk from Buy to Neutral, noting that the acquisition deal’s value is heavily reliant on Palo Alto Networks’ stock performance. These developments highlight the significant impact of the acquisition on CyberArk’s stock ratings.
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