⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Evercore ISI lifts Cognyte shares target, notes improved outlook but awaits catalysts

EditorEmilio Ghigini
Published 04/10/2024, 05:26 PM
© Cognyte PR
CGNT
-

On Wednesday, Evercore ISI adjusted its price target for Cognyte Software Ltd. (NASDAQ:CGNT) shares, increasing it to $7.50 from the previous $5.00, while maintaining an In Line rating.

The adjustment followed Cognyte's announcement of robust fourth-quarter financial results, with revenue reaching $83.7 million, marking a 17.5% year-over-year increase and surpassing the consensus estimate of $80.1 million.

The firm's analysis highlighted that the market's reaction on Tuesday did not align with Cognyte's solid execution and positive future outlook. Management's commentary was notably more optimistic compared to earlier in the year, reflecting a stabilizing macroeconomic environment. Government spending has shifted focus from COVID-19 relief to regular budgets, which has improved sales pipelines and conversion rates.

Cognyte's recent performance included significant achievements such as securing two eight-figure contracts and adding 29 new customers, a substantial increase from the 17 acquired in the same period last year. The company also emphasized its efforts to expand distribution and go-to-market strategies in North America. Additionally, the integration of AI technology into their offerings shows promise, especially for government clients looking to enhance their investigative capabilities.

Looking forward, Cognyte has set a revenue guidance for fiscal year 2025 at the mid-point of $340 million, which represents an 8.5% year-over-year growth, slightly above the consensus projection of $336 million. The company also anticipates improved gross margins and operating leverage, culminating in an expected positive adjusted EBITDA of approximately $19 million.

Despite the positive outlook for the cybersecurity market, Evercore ISI noted that Cognyte's specialization in investigative analytics poses unique challenges, particularly due to the nature of its customer base and the consequent reporting limitations.

This complexity can hinder investor understanding of the company's core financials. With the valuation at roughly 1.5 times enterprise value to CY24 sales, the firm suggests that while the current valuation seems reasonable, there may be more attractive opportunities within the sector.

Consequently, Evercore ISI awaits a clear catalyst or a consistent pattern of positive revisions that would provide greater visibility into revenue growth and cash flow before changing its stance on the stock.

InvestingPro Insights

As Cognyte Software Ltd. (NASDAQ:CGNT) navigates the competitive landscape of investigative analytics, real-time data and insights from InvestingPro provide a deeper understanding of the company's financial health and market performance. Cognyte holds a market capitalization of $511.62 million, reflecting its standing in the industry. Despite a challenging revenue growth rate of -16.71% over the last twelve months as of Q3 2024, the company has experienced a remarkable one-year price total return of 146.63%, indicating significant investor confidence and a robust stock price performance.

InvestingPro Tips highlight the company's strong liquidity position, as it holds more cash than debt, which is a reassuring sign for investors considering the company's financial stability. Additionally, Cognyte has delivered a high shareholder yield, suggesting a commitment to delivering value to its investors. However, it's noteworthy that analysts do not anticipate the company will be profitable this year, and there have been earnings revisions downwards for the upcoming period, which could be a concern for potential investors.

For those seeking to delve deeper into Cognyte's potential and explore further InvestingPro Tips, there are additional insights available on the platform. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, offering access to a broader array of tips that could guide investment decisions. Currently, there are six more InvestingPro Tips listed for Cognyte Software Ltd. that can provide investors with a more comprehensive analysis of the company's prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.