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Investing.com - Piper Sandler maintained its Neutral rating and $168.00 price target on CommVault Systems (NASDAQ:CVLT) stock on Monday amid increased focus on the data protection sector. The company, currently trading near its 52-week high of $192.01, has delivered an impressive 52.58% return over the past year. According to InvestingPro analysis, the stock appears slightly overvalued at current levels.
The research firm noted that companies in the space, including CommVault, Rubrik, and Veeam, are experiencing tailwinds. CommVault has been expanding its partnerships as part of its go-to-market strategy, according to Piper Sandler’s analysis. The strategy appears to be working, with CommVault maintaining industry-leading gross profit margins of 82.02% and achieving 18.63% revenue growth in the last twelve months.
The firm pointed out that conversions from perpetual to subscription licenses are occurring but will be "de-minimis," which they believe will still help CommVault’s growth by a few percentage points year-over-year.
Piper Sandler highlighted concerns regarding first-quarter net new annualized recurring revenue (NNARR) consensus estimates, noting many estimates include Perpetual Maintenance ARR increasing quarter-over-quarter, despite this metric declining quarter-over-quarter in recent periods.
This concern has been circulating among investors over the past week, contributing to approximately 5% underperformance in the stock, with some investors noting the potential foreign exchange benefit CommVault should receive in the first quarter. Despite these concerns, InvestingPro data shows that 5 analysts have revised their earnings estimates upward for the upcoming period. Discover more insights and 12 additional ProTips about CommVault’s financial health with an InvestingPro subscription.
In other recent news, Commvault Systems Inc. reported impressive financial results for the first quarter of fiscal year 2025, surpassing market expectations. The company achieved earnings per share of $1.03, exceeding the forecasted $0.87, while revenue reached $275 million, significantly above the anticipated $251.32 million. Subscription revenue saw a notable 45% increase, now constituting 63% of Commvault’s total revenue, driven by strong sales in cyber resilience products. Additionally, Commvault completed the sale of its headquarters in Tinton Falls, New Jersey, for $36 million, with a leaseback agreement allowing continued operations from the location.
Commvault also announced a strategic partnership with Kyndryl to enhance cyber resilience services, focusing on rapid recovery from cyber incidents and compliance with evolving regulations. This collaboration, which includes Pure Storage (NYSE:PSTG), aims to improve data protection strategies for organizations globally. Analyst Thomas Blakey from Cantor Fitzgerald reaffirmed a Neutral rating for Commvault, with a price target of $173, following the company’s robust performance and growth in subscription revenue. The company’s successful transition to a subscription-based model and strong demand for cyber resilience solutions are seen as key drivers of its ongoing growth.
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