CyberArk shares climb as Baird raises price target on ‘standout Q2’
On Friday, Baird raised the price target for CyberArk Software (NASDAQ:) shares to $315 from $295, while maintaining an Outperform rating. The adjustment followed CyberArk’s impressive second-quarter performance, which surpassed expectations and led to an increase in full-year guidance across all metrics.
The company reported a record Net New Annual Recurring Revenue (NNARR), particularly notable outside of its typically strong fourth quarter. This achievement was driven by significant new logo acquisitions and expansions among existing customers. CyberArk’s unified identity security platform, with a focus on workforce and machine identity, was highlighted as a key growth driver.
Baird’s analysis pointed out CyberArk’s profitability, emphasizing the company’s operating leverage with operating margin (OpM) and free cash flow (FCF) margins reaching 10.6% and 19%, respectively. These figures reflect CyberArk’s efficient operations and its ability to generate cash.
The upcoming acquisition of Venafi, expected in the second half of the year, is anticipated to be immediately accretive to CyberArk’s earnings. This acquisition is set to solidify CyberArk’s leadership in machine-identity management.
Baird concluded that CyberArk’s strong execution, expanding margins, and strategic vision for its platform establish the company as a sustainable Rule-of-40 entity, where combined growth rate and profit margin exceed 40%, a benchmark for successful software companies.
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