CyberArk Shares Likely To Trade Range Bound For Now; Imperial Downgrades

Cyberark Software Ltd CYBR's stock lost 12 percent on Friday after the company's first-quarter earnings beat was overshadowed by management's guidance for the full fiscal year, which fell short of expectations.

Following the earnings report, Imperial Capital's Michael Kim downgraded the Israel-based enterprise security vendor's stock rating from Outperform to In Line with a price target slashed from $63 to $55.

Kim noted CyberArk's earnings report confirmed CyberArk has plenty of growth ahead from "greenfield" expansion opportunities and add-on sales to already existing customers. But the analyst needs the company to show stronger acceleration in license revenue along with improved visibility from the announced acquisition of Conjur. In fact, Kim noted the acquisition will generate incremental dilution from the addition of 20 new people from Conjur.

Core Business Showing Concerning Signs

Kim also added that CyberArk's core business demonstrated slower growth inside of the financial services vertical along with less favorable linearity and weaker performance in the EMEA region.

Looking forward, the analyst is paying attention for signs of upside to current estimates, which could come from a revised focus in the EMEA region, higher pipeline conversion, penetration from the sale of multiple products and early adoption of DevOps security.

Finally, Kim's revised price target is "consistent with recent levels" and justified until the company can demonstrate improved sales productivity and demand generation activities.

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