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Investing.com-- Jefferies initiated coverage of cybersecurity firm Sailpoint Inc (NASDAQ:SAIL) with a Buy rating, stating that the company was a leader in identity software and stood to benefit from increased adoption of generative artificial intelligence.
Jefferies also set a price target of $26 for the stock, representing an upside of nearly 18% from its Friday close.
The positive rating comes just weeks after SAIL returned to public equity markets with a $1.38 billion initial public offering in February. The company was last listed in 2022, before being taken private by Thoma Bravo.
Jefferies said that in the past three years, SAIL had made progress in its transition towards software as a service, had broadened its platform to include machine identities, was offering more competitive products, and was also enjoying stronger performance in its top and bottom lines.
The company is expected to benefit from increased gen AI adoption, Jefferies said, with the advent of AI programs furthering the need for more identity protections and cybersecurity.
Jefferies sees SAIL’s total addressable market at $10.0 billion in 2025 and up at $14 billion in 2028.
Average recurring revenue is also expected to increase 29% in 2025, remaining close to the 31% jump seen in 2024, with an average growth rate of over 20% forecast until 2028.
Still, Jefferies noted that large deal volatility and a relatively high valuation presented risks for the stock. The brokerage also noted that Thoma Bravo still owns about 85% of the firm.