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CyberArk: Jefferies raises PT on ARR growth view, Venafi acquisition benefits

by December 9, 2024
written by December 9, 2024

Investing.com– Jefferies has increased its price target for CyberArk Software (NASDAQ:CYBR), citing a favorable 2025 setup for annual recurring revenue (ARR) growth and optimism around the Venafi acquisition.

The brokerage raised its target to $400 from $340 for the cybersecurity firm.

CyberArk’s 2025 ARR expectations, including Venafi, imply a 20% year-on-year growth, aligning with the company’s conservative projections. Jefferies anticipates CyberArk will guide ARR growth in the low-20% range to start 2025, with a gradual upward trend throughout the year.

Venafi, acquired recently, presents significant cross-selling opportunities for CyberArk, Jefferies analysts said in a note. “We remain bullish on Venafi, but acknowledge that it will take time to ramp the growth profile and advise investors to temper near-term expectations,” analysts wrote.

If 10% of CyberArk’s existing customers adopt Venafi solutions, it could add $85 million in ARR, Jefferies analysts said, adding that they see this “as very prudent”.

CyberArk expects free cash flow margins of 21%-22% in 2024, a notable improvement from 7% in 2023. Jefferies projects further FCF inflection in 2026 and 2027 as the service as a software (SaaS) transition matures, forecasting a 26% FCF margin in 2027.

The conversion of maintenance customers to SaaS remains a key driver, analysts said. With a two to three folds uplift in ARR through these conversions, CyberArk has a substantial opportunity to boost revenue over the next two years, they added.

Overall, Jefferies remains optimistic about CyberArk’s growth trajectory and its ability to capture emerging market opportunities.

This post appeared first on investing.com
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