RBC sees CyberArk stock growth driven by identity security demand

On Friday, RBC Capital initiated coverage on CyberArk Software (NASDAQ:CYBR) stock, a prominent player in the cybersecurity sector, with an Outperform rating and a price target of $328.00.

The firm's coverage begins as they view CyberArk as a leading mid-cap cybersecurity stock, well-positioned to consolidate identity spending and sustain profitable growth.

CyberArk is seen as favorably situated to capitalize on the identity security sector, which remains a top priority for spending. The company has potential for expansion within its core Privileged Access Management (PAM) services.

Additionally, CyberArk is expected to benefit from cross-selling opportunities in Endpoint Privilege Manager (EPM), Access, Secrets, and Machines products. The firm also notes CyberArk's advantageous position following its subscription transition, which is anticipated to lead to an upward bias in profitability.

RBC Capital's price target is based on a 13.5 times multiple of the estimated Calendar Year 2025 Enterprise Value to Sales (E/S), a premium justified by CyberArk's prospects for durable growth. The analyst's outlook reflects confidence in CyberArk's strategic initiatives and market position, underlining the potential for the company's continued expansion and increased profitability in the cybersecurity industry.

The coverage initiation and price target set by RBC Capital provide a positive outlook for CyberArk, suggesting that the company's strategic investments and market focus are well-aligned with industry trends and customer priorities. CyberArk's stock performance and investor sentiment may be influenced by this optimistic perspective from a major financial institution.

In other recent news, CyberArk Software has been making waves with its impressive financial performance and strategic growth. The company's second quarter 2024 earnings report showed a 28% growth in total revenue, reaching $224.7 million. Additionally, its Annual Recurring Revenue (ARR) expanded by 50%, contributing to a total ARR of $868 million.

Following this performance, analysts from DA Davidson, Canaccord Genuity, and Baird have all reiterated positive ratings for CyberArk, with DA Davidson and Baird setting a price target of $315, and Canaccord Genuity setting a target of $310.

These recent developments highlight the increasing market traction of CyberArk's Identity Security platform, particularly its non-PAM (Privileged Access Management) solutions. The company's management team has emphasized the positive impact these solutions are having on customer spending, pointing out the growth in customer engagements related to Secrets Management and Workforce Identity and Access Management (IAM).

Moreover, CyberArk's pending acquisition of Venafi is expected to enhance its capabilities in machine identity management and be immediately accretive to earnings, as highlighted by Baird.

This, along with the company's strong execution, expanding margins, and strategic vision, establish CyberArk as a sustainable Rule-of-40 entity, where combined growth rate and profit margin exceed 40%. A benchmark for successful software companies, this status further underscores CyberArk's strong market position.

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