On Wednesday, Barclays (LON:BARC) adjusted its outlook on CyberArk Software (NASDAQ:CYBR), increasing the price target to $335 from $330. The firm maintains an Overweight rating on the cybersecurity company's shares. The adjustment follows CyberArk's third-quarter performance, which surpassed expectations in net new Annual Recurring Revenue (ARR) and resulted in an uplifted forecast for full-year Free Cash Flow (FCF).
The focus of Barclays' analysis is the contribution of Venafi, a recent acquisition by CyberArk, to the company's financial model. Venafi is expected to add $164 million in fourth-quarter ARR, although there is a cautious note on the $68 million in organic net new ARR, which the analyst views as a conservative estimate. For the fiscal year 2025, Barclays anticipates that Venafi will contribute an additional $200 million in ARR.
Barclays' report also includes projections for CyberArk's FCF, modeling it to be just under $300 million, with the Venafi acquisition being accretive to the company's financials. The analyst's comments underscore the strategic impact of the Venafi deal and CyberArk's effective management of its growth and financial metrics.
CyberArk's recent financial performance, particularly in terms of ARR growth, has been a positive signal to analysts and investors alike. With the revised price target and continued Overweight rating, Barclays signals confidence in CyberArk's growth trajectory and its ability to integrate and benefit from its acquisition of Venafi.
In other recent news, CyberArk Software (ETR:SOWGn) has been the focus of positive attention from several financial firms. Baird has maintained its Outperform rating on the company and increased the price target to $355, anticipating a strong third-quarter earnings report. The company's second quarter 2024 earnings report showed a 28% growth in total revenue, reaching $224.7 million, and a 50% expansion in Annual Recurring Revenue (ARR), contributing to a total ARR of $868 million.
CyberArk's recent acquisition of Venafi is expected to contribute positively to future performance. Oppenheimer has upgraded its stock target for CyberArk, citing expected surpassing of third-quarter revenue guidance set between $230 million and $236 million. Scotiabank (TSX:BNS) initiated coverage on CyberArk with a Sector Outperform rating and a price target of $340, while RBC Capital initiated coverage with an Outperform rating and a price target of $328.
InvestingPro Insights
CyberArk's strong performance and Barclays' optimistic outlook are further supported by recent data from InvestingPro. The company's revenue growth remains robust, with a 30.52% increase over the last twelve months as of Q2 2024, aligning with the positive ARR trends noted in the article. This growth is complemented by an impressive gross profit margin of 80.62%, reflecting CyberArk's ability to maintain pricing power in the competitive cybersecurity market.
InvestingPro Tips highlight that CyberArk holds more cash than debt on its balance sheet, which could provide financial flexibility for future acquisitions or investments in growth initiatives. Additionally, analysts predict the company will be profitable this year, potentially marking a turnaround from its current unprofitable status over the last twelve months.
The stock's performance has been noteworthy, with a 64.56% price total return over the past year and trading near its 52-week high. This aligns with Barclays' increased price target and Overweight rating. However, investors should note that CyberArk is trading at a high revenue valuation multiple, which may reflect high growth expectations.
For those interested in a deeper analysis, InvestingPro offers 13 additional tips for CyberArk, providing a comprehensive view of the company's financial health and market position.
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