DA Davidson Offers 4 Reasons To Like Imperva

Cybersecurity company Imperva Inc IMPV is well-positioned for growth with a portfolio of multiple, competitive and differentiating products, according to D.A. Davidson.

The Analyst

D.A. Davidson's Mark Kelleher initiated coverage of Imperva's stock rating with a Buy rating and 12-18-month price target of $56.

The Thesis

The case for owning Imperva's stock is fourfold, Kelleher said in the Tuesday initiation note:

• The company is a leading cybersecurity provider that offers protection for business-critical applications. Customers can buy on premise, in the cloud or as a service to protect files, databases and web applications. Encouragingly, demand for these services remains strong, as seen in the company's 21.7-percent revenue growth in fiscal 2017 — a rate Kelleher said is sustainable for at least the next few years.
• Imperva's 2014 acquisition of Israel-based Incapsula gives the company a content delivery network to enable cloud-based security and performance services. This gives Imperva a significant advantage in the security market to the point where it can rival larger competitors for a portion of the DDoS threat mitigation market.
• Imperva's business continues to evolve to a recurring revenue model, the analyst said. Services revenue, which represents all of Imperva's recurring revenue streams, was 70 percent of total revenue in 2017, up from 67 percent one year ago.
• Imperva's balance street is "strong," as the company ended 2017 with $10.40 per share in cash with zero debt on the balance sheet, according to D.A. Davidson. Imperva generated $53 million in free cash flow throughout 2017, while deferred revenue at the end of 2017 stood at $159 million, up 22 percent from a year prior. 

Price Action

Imperva shares were up 3.64 percent near the end of Wednesday's trading session. 

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