3 Near-Term Catalysts For Proofpoint Remain Intact

Proofpoint Inc PFPT is scheduled to report its Q4:16 results on Thursday after market close.

D.A. Davidson’s Jack Andrews reiterated a Neutral rating on the company, with a price target of $79.

Q4 Expectations

The analyst expects Proofpoint to report revenue growth of 41.9 percent year-on-year for Q4:16 to $106.4 million, marginally above the high end of the guidance and the consensus expectations.

The non-GAAP EPS is expected at $0.15, again marginally beating the consensus forecast and slightly above the high end of the guidance range.

“We note PFPT has beaten consensus revenue estimates in every quarter since it went public, whereas EPS came in line three times and missed once,” Andrews mentioned.

Billings is expected to grow 40.2 percent year-on-year to $138.7 million, beating the high end of the company’s guidance range.

Near-Term Catalysts

The analyst pointed out that three near-term catalysts remain intact for Proofpoint:

• “First, businesses are recognizing that regardless of what the macro environment is, E-mail protection is as important as ever as there are thousands of cyber threats every minute—thus driving demand for PFPT products,” Andrews stated.
• Second, the analyst noted that the transition from McAfee to Proofpoint was proving beneficial, since it was not only a source of new customers, but was also helping in enhancing the opportunity to sell Proofpoint’s products to these new customers, in addition to their earlier McAfee services.
• Third, “customers moving to Office 365 continue to look for additional security capabilities to complement and enhance the base security provided by Microsoft Corporation MSFT,” Andrews said.

Proofpoint closed Monday trading at $79.54.