How To Trade Proofpoint's Q1 Earnings Report

Proofpoint Inc PFPT is scheduled to report its Q1 2017 results on Thursday.

The results will likely be in-line with or ahead of expectations, “driven by continued strong growth in the protection business and increased cross-selling/upselling of the company’s nine core product offerings,” Imperial Capital’s Michael Kim said in a report.

Mentioning potential upside from social media security and compliance solutions, Kim maintained an Outperform rating on Proofpoint, with a $100 price target.

Q1 Preview

Kim expects the company to report quarterly revenue of $111 million and adjusted EPS of $0.09, with billings growth of 37 percent year-over-year, in-line with the high-end of management’s guidance range of $133-$135 million.

Related Link: Use Any Weakness In Proofpoint To Accumulate Shares

Channel checks suggest Proofpoint’s protection business is “strongly capitalizing on migrations to Office 365,” without any significant changes to the company’s win rates or leadership position, the analyst noted.

Kim expects the adoption of social media security and compliance solutions to continue to ramp, backed by rising social media fraud, including major brands being challenged by fake customer service accounts.

Moreover, the company’s privacy, archiving and governance solutions could benefit from strong demand due to compliance requirements and the growing adoption of cloud-based archiving solutions, the analyst mentioned.

Proofpoint’s shares could trade at a premium to the peer group average, given the company’s “higher growth rate, recurring revenue visibility, and proven technology,” Kim believes.