CyberArk Software Has 15% Upside

Imperial Capital upgraded Cyberark Software Ltd CYBR to Outperform from In-Line on strong license revenue growth, which, according to be brokerage, underscores the expanding market  awareness for privileged account security (PAS) and the company’s early leadership position.

Further, the signing of a key contract with U.S. federal government is a validation of the company’s technology and should lead to more customer wins in the public sector space.The company has also captured over 25 percent of the Global 2000 customers and the penetration is expected to continue.

“We anticipate continued gains in wallet share of information technology budgets and significant growth from “greenfield” opportunities, as well as expansion from add-on sales to existing customers,” analyst Michael Kim wrote in a note.

Kim also highlighted management’s focus on operational discipline, profitable growth and cash flow margins at the upper end of comparable companies in the security sector.

“We look for potential upside from increasing penetration into endpoints through the Viewfinity acquisition and key vertical markets such as the public sector,” Kim noted.

Last week, the company reported third quarter adjusted EPS of $0.33 on revenue of $55 million versus Street estimates of $0.23/$52.3 million. For the fourth quarter, the company sees revenue of $62-$63.0 million, and adjusted EPS of $0.31-$0.33.

“We believe investors could become increasingly constructive on the stock as the company gains greater scale and achieves broader adoption of its newer offerings (e.g., Application Identity Manager, Privileged Threat Analytics, Viewfinity),” Kim added.

Shares of Cyberark closed Friday at $47.73. Kim has a price target of $55, implying potential upside of 15 percent.