Use Any Weakness In Proofpoint To Accumulate Shares

Proofpoint Inc PFPT reported strong Q4 results on Thursday, beating expectations, and raised its 2017 guidance. “Looking forward, PFPT will see additional tailwind from larger McAfee conversions, accelerating adoption of Office 365 driving SaaS-based security protection, and continued adoption of TAP [Targeted Attack Protection],” Wunderlich’s Bill Choi said in a report.

Choi maintains a Buy rating on the company, while raising the price target from $90 to $93.

Beat And Raise On Deal Pipeline

Proofpoint reported its Q4 revenue at $106.8 million, beating the consensus estimate of $104.8 million. EPS came in at $0.18, higher than the consensus estimate of $0.13. Although the company’s billings beat of 4 percent was lower than the 9–10 percent achieved in the prior two quarters, “deal pipeline is notably strong,” Choi mentioned.

The company guided to Q1 revenue of $109 million–$111 million, versus consensus of $106.6 million, and EPS of $0.07–$0.09, higher than consensus of $0.05. Proofpoint raised its FY17 guidance to revenue of $488 million–$492 million and EPS of $0.49–$0.52, reflecting 30–31 percent billings growth.

Performance Of Shares

Proofpoint’s shares were already trading at a premium to the next-gen security group mean, the analyst noted. He believes the stock would trade at an even higher premium with accelerated market share gains, continued upsell of TAP and diversification toward archiving and governance.

Terming Proofpoint as a long-term holding, Choi recommended to accumulate shares on any price weakness.