UPDATE: JMP Securities Upgrades CommVault Systems to Market Outperform, Names $80 PT on Multiple Factors

In a report published Monday, JMP Securities analyst Greg McDowell upgraded the rating on CommVault Systems CVLT from Market Perform to Market Outperform, and named an $80.00 price target. In the report, JMP Securities noted, “We raise our rating on CommVault Systems from Market Perform to Market Outperform and establish an $80 price target. We upgrade the stock for three main reasons. First, we recently conducted a survey of sixteen CommVault customers on their spending intentions for CommVault in calendar year 2014. We found that over half of the customers surveyed planned to purchase more CommVault licenses in 2014 and over half of the customers surveyed expect CommVault to gain market share in 2014. The results of our spending survey give us confidence to raise our FY15 revenue estimate from $670 million to $689 million (consensus $681 million) and raise our FY16 revenue from $764 to $806 million (consensus $782 million). Second, with Dell now representing only 11% of revenue, we feel comfortable that the Dell headwind is largely behind CommVault. Finally, with the stock off 26% from its 52-week high (vs. Nasdaq -3%) and the potential for accelerating software billings growth in the second half of CY14, we believe it has entered oversold territory with the company trading at 15x EV/CY15 FCF, below its revenue growth rate, and at 27x CY15 earnings, a discount to its historical P/E ratio of 33x. We raise our FY14 non-GAAP EPS estimate from $1.87 to $1.90 versus consensus of $1.89, raise our FY15 non-GAAP EPS estimate from $2.06 to $2.18 versus consensus of $2.10, and raise our FY16 non-GAAP EPS estimate from $2.36 to $2.69 versus consensus of $2.45. Our $80 price target is based on an EV/CY15 FCF multiple of 18x, roughly in line with our expected FY15 and FY16 growth rates.” CommVault Systems closed on Friday at $66.52.