On Wednesday, DA Davidson maintained a Neutral rating on Qualys (NASDAQ: NASDAQ:QLYS) but increased the stock's price target from $120.00 to $147.00. The adjustment follows Qualys's third-quarter performance, which surpassed expectations with significant revenue and calculated current billings (CCB) beats. The company also reported higher earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) than anticipated.
The positive results were largely attributed to better-than-expected upsell activity, as indicated by the trailing twelve-month dollar-based net expansion rate (DBNER) inching up from 102% to 103%. Despite the strong quarter, the analyst noted some concerns regarding the fourth-quarter pipeline, which appears to be weaker than management would prefer.
Furthermore, the forecast for TTM CCB growth suggests an increase of 7-8% year-over-year as the company exits the 2024 calendar year. This projection indicates that revenue growth for the calendar year 2025 is expected to remain in the mid-single-digit (MSD) range.
The analyst concluded that, given the outlook, Qualys shares seem to be fully valued at 21 times the enterprise value to the calendar year 2025 free cash flow (EV/CY25 FCF). The revised price target reflects the recent financial performance, while the Neutral rating indicates a cautious stance on the stock's current valuation.
In other recent news, cybersecurity firm Qualys has reported an 8% year-over-year increase in Q2 2024 revenue, reaching $148.7 million. Despite facing challenges, including decreased demand for its standalone Vulnerability Management (VM) offering and increased competition from Crowdstrike's new tool, Falcon Network Vulnerability Assessment, the company continues to innovate. Qualys recently launched the first cloud-based Risk Operations Center (ROC) with Enterprise TruRisk Management (ETM), aimed at streamlining cybersecurity risk management.
In addition, Qualys has introduced TruRisk Eliminate, a product designed to enhance vulnerability management, and plans to expand its GovCloud platform. The company projects an 8-10% increase in revenue for the full year 2024, estimating figures between $601.5 million and $608.5 million.
Analysts from Jefferies, TD Cowen, Canaccord Genuity, RBC Capital, and JPMorgan have adjusted their outlooks on Qualys shares due to these developments. Jefferies initiated coverage on Qualys with a Hold rating and set a price target of $135.00, expressing reservations about significant growth prospects. TD Cowen also maintains a Hold rating, despite twice revising its price target for Qualys due to the aforementioned challenges.
InvestingPro Insights
Recent data from InvestingPro adds depth to the analysis of Qualys (NASDAQ: QLYS). The company's market capitalization stands at $4.72 billion, with a P/E ratio of 27.62, aligning with the analyst's view on valuation. Qualys boasts impressive gross profit margins of 81.5% for the last twelve months as of Q2 2024, underscoring its operational efficiency.
InvestingPro Tips highlight that Qualys holds more cash than debt on its balance sheet, which could provide financial flexibility in the face of the weaker fourth-quarter pipeline mentioned in the article. Additionally, 18 analysts have revised their earnings upwards for the upcoming period, suggesting potential optimism despite the cautious outlook.
These insights complement the article's discussion on Qualys's performance and valuation. For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Qualys, providing a broader perspective on the company's financial health and market position.
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