CyberArk 'More Broadly Adopted As Security,' Morgan Stanley Says

Security software company CyberArk Software Ltd. CYBR has developed software to eliminate cyber threats within financial, retail and healthcare services.

The Analyst

Morgan Stanley's Melissa Franchi upgraded CyberArk from Equal-Weight to Overweight and raised the price target from $71 to $92.

The Thesis

Despite some time on the sidelines, Franchi upgraded the valuation based on a deeper model dive, favorable channel checks and fundamental factors that will improve execution.

“CyberArk now has the tech in place to address this expanding footprint, with its solution now offered in the AWS marketplace and with the Conjur technology ramping," Franchi wrote in a note.

According to Franchi, the company demonstrates three ways to reduce buyer friction, such as:

Bundled offerings of security, as a way to improve sales velocity.
CyberArk Privilege Cloud, which allows the company to offer a subscription-based service.
Multi-tenant offering for security services, which allows for pay-as-you-go service offerings.

Sales execution issues are in the past, as the competitive landscape remains favorable for the opportunity of mergers and acquisitions, Franchi said. While the company has reported strong performance overall, growth and margins strongly impact this valuation.