KeyBanc Projects $30B Total Addressable Market For Carbon Black In Bullish Initiation

Cybersecurity provider Carbon Black Inc CBLK is a standout in a crowded segment, according to KeyBanc Capital Markets. 

The Analyst

KeyBanc's Rob Owens initiated coverage of Carbon Black with an Overweight rating and $29 price target.

The Thesis

Fresh off an early May initial public offering, Carbon Black's status in the cyber security market is due to a broad portfolio that addresses multiple use cases and needs, and its approach to data collection and analysis, Owens said in the initiation note.

The company's products connect through a unifying cloud platform called Cb Predictive Security Cloud, which is able to combine real-time insights and create new opportunities in adjacent services like vulnerability management and IT asset management, the analyst said. 

Carbon Black is better-positioned to address a large potential market opportunity over the coming years than competitors, Owens said.

Data from IDC suggests the core endpoint security market will total $8.3 billion by 2021, but the broader opportunity in cloud-based security software could expand the company's total addressable market to more than $30 billion, the analyst said. 

The stock looks attractive on the basis of Carbon Black's recurring revenue model; 88 percent of total revenue in 2017 was recurring in nature, Owens said. The company's ARR has been growing at a 51-percent compounded annual rate since 2015, while net renewal rates have stood above 90 percent in the same time period, he said. 

Price Action

Carbon Black shares were up 0.61 percent at the time of publication Tuesday. 

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