Cyberark Among The Few 'Reasonably Priced' Software Stocks, JPMorgan Says In Upgrade

Cyberark Software Ltd CYBR infrastructure and assets, reported second-quarter results Tuesday that compelled JPMorgan to upgrade the stock. 

The Analyst

JPMorgan's Sterling Auty upgraded Cyberark from Neutral to Overweight with a price target lifted from $60 to $85.

The Thesis

Cyberark reported not only a top-and-bottom line beat in Q2, but a "significant" billings beat $11.8 million ahead of JPMorgan's estimates, Auty said in the upgrade note. (See the analyst's track record here.) 

The earnings report prompted the analyst to conclude a lot has changed since JPMorgan took a Neutral stance on the stock in July 2017.

Cyberark's go-to-market motion in both Americas and Europe has matured, and the company has executed well under a "more stable" leadership team, Auty said. Cyberark is no longer a "one-trick pony" as evidence by management signing 31 new U.S. federal agencies across 20 departments, accounting for 15 percent of revenue. 

Looking forward to fiscal 2019 and 2020, Cyberark's strong growth across multiple segments and regions is encouraging, Auty said. JPMorgan lifted its growth rate projection from 16.9 percent in 2019 and 15.1 percent in 2020 to 20 percent in both years, the analyst said. 

Cyberark's Q2 makes it clear it is among the very few "reasonably priced stocks" left in software at just 5 times EV/sales and 15.5 times EV/FCFF on 2019 estimates.

Price Action

Cyberark shares were rallying more than 14 percent to $70.43. 

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