Why This Analyst Set An Outperform Rating On CyberArk Shares

In a report published Friday, JJMP Securities analyst Erik Suppiger initiated coverage of

with a Market Outperform rating and $72 price target as the Privileged Account Management (PAM) market is a rapidly growing opportunity with the potential to become a multi-billion dollar market. According to Suppiger, the cyber-security space is undergoing a "paradigm shift" as investments continue to be directed towards internal security. As such, PAM is becoming a "core component" of internal security infrastructure. In addition, the adoption of cloud computing represents a "significant" long-term catalyst that is in the very early stages of development. The analyst continued that based on his checks, CyberArk is emerging as the "premier brand leader" given its key competitive advantages including differentiated features, product breadth and integration with ecosystem partners. "The company is also unique in terms of generating attractive profit margins while growing at explosive rates and we believe it can exceed consensus expectations over the coming years," Suppiger noted. Looking forward, Suppiger estimated CyberArk will grow its revenues 35 percent and 34 percent year over year in calendar year 2015 and 2016, respectively. The growth projection is above the consensus estimate of 29 percent for 2015 and 25 percent in 2016. Finally, a $72 price target represents an EV of 12x the analyst's calendar year 2016 revenue estimate, representing a 75 percent premium to the comps. Shares of Cyberark were trading higher by 1.28 percent at $61.90 just before the start of Friday's regular trading session.