Summit: Buy Qualys, Selloff 'Overdone'

In a report published Tuesday, Summit Research analysts initiated coverage of

with a Buy rating and a price target of $50. In the report Summit Research noted, "Qualys is the clear industry leader in Vulnerability Management (VM) and is growing faster (although the growth slowed in F1Q with stock slumping) than the market and gaining share from legacy VM vendors (McAfee)." The company continues to expand its core VM offering, which accounts for 80 percent of its revenue, to adjacent areas such as Policy Compliance, which comprises of about 9 percent of revenue, and Web App Scanning, which accounts for about 9 percent of revenue. Qualys also continues to up-sell and cross-sell to boost revenue growth over the next several years. "New and impending product offerings will increase TAM and provide years of growth for the company. Despite recent miss and lower guide due to delayed closing of larger transactions, we believe the company's core position in the market is still intact," the analysts mentioned. The revenue and EPS estimate for F2Q15 are $39.5mln and $0.10, versus consensus of $39.8mln and $0.11, respectively. The revenue and EPS estimate for FY15 are $165.4mln and $0.52, versus consensus of $165.8mln and $0.53, respectively. Following the recent downturn in the company's share price, the stock seems "attractive at current levels," the analysts added.