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Cyberark Bull Concerned With Tough Comparisons, Growth Issues And Valuation

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Cyberark Bull Concerned With Tough Comparisons, Growth Issues And Valuation

  • Shares of Cyberark Software Ltd (NASDAQ: CYBR) lost nearly 10 percent of its value by early Tuesday afternoon.
  • Tal Liani of Bank of America downgraded the stock to Neutral from Buy with a price target slashed to $48 from a previous $80.
  • The analyst noted tough comparisons, limited upside to valuation and concerns over growth deceleration.
  • Shares of Cyberark lost nearly 10 percent on Tuesday after Tal Liani of Bank of America downgraded the stock to Neutral from Buy with a price target slashed to $48 from a previous $80. While the issue has regained slightly, at the time of this writing, it is selling down almost 8 percent at $41.29.

    Liani, a former Cyberark bull, noted his downgrade is warranted given three key concerns: 1) high expectations and difficult comparisons in the coming quarters, 2) limited upside to the stock's current valuation (7.0x 2016E EV/S) and 3) concerns that a deceleration of growth could plague the company.

    Related Link: Benzinga's Top Downgrades

    Past Performance

    Liani noted that Cyberark has "executed well" in the past as the company's revenue grew "substantially" since its IPO. Specifically, the company saw a 63 percent year-over-year increase in revenue during the first three quarters.

    Liani continued that Cyberark's high gross margin licensing model and "disciplined" cost management led to a doubling of the company's earnings per share on a year-over-year basis for the first three quarters of 2015.

    Sense Of Caution

    The analyst acknowledged that while he doesn't see any signs of "weak performance," concerns over earnings in the coming quarters drove his "cautiousness." The analyst also noted that the entire sector is beginning to show "signs of fatigue."

    Finally, Liani stated that his new $48 price target is based on a 7.5x 2016E EV/S multiple, which is equivalent to a 28x 2016E EV/FCF multiple – sitting at the high-end of the group average.

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    Latest Ratings for CYBR

    DateFirmActionFromTo
    Apr 2019BarclaysMaintainsEqual-WeightEqual-Weight
    Mar 2019MizuhoInitiates Coverage OnBuy
    Mar 2019WedbushMaintainsOutperformOutperform

    View More Analyst Ratings for CYBR
    View the Latest Analyst Ratings

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