Imperva Shares Reach A Compelling Valuation, D.A. Davidson Now A Buyer

Imperva Inc IMPV reported its Q3 results ahead of expectations. The results indicated “stabilizing business fundamentals, and/or improving execution,” D.A. Davidson’s Jack Andrews said in a report. He commented that management’s implementation of a restructuring initiative made the stock “a vehicle combining high growth with rapid margin expansion.”

Analyst Andrews upgraded the rating on Imperva from Neutral to Buy, while raising the price target from $55 to $57.

Results And Guidance

Imperva reported its revenue at $68.4 million, beating D.A. Davidson’s estimate of $62.8 million and the Street’s $63.1 million. The company recorded 8 percent year-over-year revenue growth and posted an adjusted EPS of $0.08, significantly higher than the D.A. Davidson estimate of $(0.14) and the Street’s $(0.16).

The company’s guidance was also ahead of expectations, with Q4 revenue and non-GAAP EPS of $69 million–$71 million and $0.01–$0.04, respectively, versus consensus estimates of $69.4 million and $(0.16).

3 Reasons For Upgrade

Andrews enumerated three reasons for the upgrade in rating:

1. The Q3 beat.
2. Implementation of restructuring plan, with estimated annual savings of $15 million.
3. Compelling valuation: “With the overhang and uncertainty regarding the strategic review now lifted, and with IMPV shares trading 62 percent below our new price target of $57 (up from $55), we encourage investors to accumulate shares at current levels,” the analyst commented.

At last check, Imperva was up 3.77 percent at $36.42.