CyberArk's Top-Line Growth Could Outpace The Market, Says Barclays

Barclays analyst Saket Kalia has upgraded Cyberark Software Ltd CYBR to Overweight from Equal Weight. The analyst also lifted the price objective to $60 from $44, saying he liked the PAM market for the long term. He also liked the second half of the current year's outlook.

The brokerage cited three reasons behind in upgrading and boosting the price target. The first among them is the 15–20 percent long-term growth in PAM market, as Kalia believes the company will continue to take its share. Secondly, the analyst expects the company to generate $120 million free cash flow during the upcoming three-year period citing cash flow margin expansion.

The third reason is the expectation that the Federal spending in the United States and disruption from rivals could fuel enough upside potentials to estimations in the second half of the current year.

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"We think growth in the privileged access management (PAM) market could be 15–20 percent through FY19, which is faster than IDC's estimate of 10–12 percent, because we think the potential market size is $2–3 billion which supports higher market growth rates. Furthermore, we think CYBR still has ample runway with large accounts as less than 20 percent of its customers are from the Global 2000," the analyst wrote.

The brokerage takes a long-term view of CyberArk early in its lifecycle, as the analyst is excited about the current year's second half. The analyst said, "We are keen on owning this name into 2H16 as we think CYBR could benefit from US Federal spending, seasonal budget flush, and potential disruption from the Qwest acquisition."

At time of writing, the stock was trading 3.49 percent higher at $50.09 following the upgrade.