Goldman Maintains Buy Rating On Cyberark Following Q1 Results

Cyberark Software Ltd CYBR reported better-than-expected 1Q16 revenue and EPS. Goldman Sachs’ Gabriela Borges maintained a Buy rating for the company, with a price target of $51. The analyst commented that the performance reflected “continued product growth and unparalleled operating leverage.”

Performing Better Than Security Peers

Cyberark reported its 1Q sales of $47mn, representing 43 percent y/y growth, higher than expectations. Non-GAAP EBIT margins came in at 22.8 percent, and were significantly better than GS and Street estimates.

CyberArk announced its 2Q sales guidance at $47.5-$48.5mn, representing 31-33 percent y/y growth, in-line with the Street and GS expectations, while guiding to EBIT of $8.6-$9.5mn ahead of the Street and GS estimates of $8.0mn. The company raised its 2016 sales guidance by 2 percent, EBIT by 5 percent and non-GAAP EPS by ~$0.05 at the midpoint, analyst Gabriela Borges noted.

“CyberArk illustrated solid product revenue growth and unparalleled operating leverage in its report, which especially stands out against a mixed backdrop of security spending and peer earnings reports,” Borges wrote.

Still Has Runway

As the scale of the company’s business increases, it would become more predictable and quarterly beats would be more modest. “Nonetheless, our bottom-up TAM analysis suggests the company still has significant runway ahead in privileged account management, with CyberArk noting increasing customer diversity and awareness as it expands its channel partnerships,” the analyst mentioned.

There seems to be 15-30 percent M&A potential, in view of the company’s attractive technology as well as growth and EBIT profile, the Goldman Sachs report stated.