Last Update 08 Feb 26

Fair value Decreased 20%

CVLT: Reset Multiples And Higher Margins Will Create Future Upside Potential

Analysts have reset their price expectations for Commvault Systems, trimming the fair value estimate from about $175 to roughly $140 as they incorporate lower Street price targets, slightly higher discount rates, modestly softer revenue growth assumptions and a reduced future P/E, partly balanced by higher projected profit margins.

Analyst Commentary

Street research over the recent period has been dominated by a series of lower price targets for Commvault Systems, with multiple firms adjusting their views on valuation in light of changing sector multiples, security spending expectations and competitive considerations.

While the individual notes differ in detail, they tend to cluster around two themes: what is still working in the story and what could pressure the stock if execution or the market backdrop disappoints.

Bullish Takeaways

Several bullish analysts continue to see Commvault as a quality operator in data protection and security adjacent markets, which they view as supporting the use of premium P/E multiples relative to slower growth software peers.
Higher projected profit margins in some models signal confidence that management can keep tightening costs and improving mix, which supports the updated fair value estimate even as top line assumptions are more conservative.
Where ratings are maintained at positive levels alongside lower targets, bullish analysts appear to view the pullback in targets as a recalibration to sector multiples rather than a fundamental break in the long term thesis.
Ongoing attention from a wide set of research desks is seen by some investors as a positive, since it helps keep the stock on institutional radar and can support liquidity and valuation diversity.

Bearish Takeaways

Bearish analysts are generally keying off modestly softer revenue growth assumptions and reduced future P/E multiples, which pull their valuation work closer to sector averages and compress upside in their models.
One detailed note references incremental caution on security budgets and incremental competitive concern, which could make it harder for Commvault to win new customers or expand existing deals at the pace some had previously expected.
The clustering of target cuts across several firms in a short time frame points to a more cautious stance on execution risk, especially if demand for security and data protection solutions becomes more scrutinized by customers.
Lowered targets in quick succession may also reflect reduced confidence in how much investors are willing to pay for the stock on a forward earnings basis, even if near term profitability metrics remain solid in analyst models.

What's in the News

Commvault issued earnings guidance for Q4 FY 2026, with subscription revenue expected at US$203 million to US$207 million and total revenue at US$305 million to US$308 million, and updated FY 2026 targets for subscription revenue to US$764 million to US$768 million and total revenue to US$1.177b to US$1.18b.
The company expanded its share repurchase activity, completing buybacks of 7,359,883 shares for US$687 million under the May 2022 program and later increasing remaining authorization to US$250 million.
Commvault introduced Commvault Geo Shield and Commvault Cloud Unified Data Vault, aimed at data sovereignty and S3 based workload protection, as part of a broader push around its AI enabled Commvault Cloud Unity platform release.
New and expanded partnerships were announced with Google Cloud, Pinecone, AWS European Sovereign Cloud and Delinea, focused on cloud data protection, cyber resilience for AI workloads, sovereign cloud support and privileged access management.
Commvault disclosed that Chief Financial Officer Jen DiRico will leave at the end of the calendar year, with an Office of the CFO set up under the CEO while a search for a new CFO is underway.

Valuation Changes

Fair Value: trimmed from about US$174.58 to roughly US$140.33, representing a sizeable step down in the modelled estimate.
Discount Rate: raised slightly from about 8.88% to around 9.06%, indicating a modestly higher required return in the updated work.
Revenue Growth: eased from roughly 12.07% to about 11.66%, reflecting slightly softer top line assumptions.
Net Profit Margin: lifted from around 9.55% to about 10.13%, indicating expectations for a leaner cost base or better mix.
Future P/E: reduced from approximately 67.33x to about 48.40x, bringing the assumed earnings multiple closer to more moderate levels.

Accelerating demand for advanced cyber resilience and compliance-ready data management is driving expanded enterprise adoption and recurring revenue growth.
Increasing SaaS platform success, strategic partnerships, and a shift to subscription-based models are improving revenue quality, market reach, and long-term earnings stability.
Heavy reliance on expanding existing customer subscriptions and lumpy large deals, alongside evolving revenue models and integration risks, could challenge Commvault's future growth, margin stability, and market position.

Catalysts

About Commvault Systems

Provides a cyber resilience platform for protecting and recovering data and cloud-native applications in the Americas and internationally.What are the underlying business or industry changes driving this perspective?

Surging demand for enterprise data protection and recovery fueled by accelerating cyber threats, with Commvault's enhanced cyber resilience platform (including Cleanroom Recovery, Air Gap Protect, and the upcoming Satori Cyber acquisition) driving new customer adoption and increased wallet share-likely supporting sustained double-digit revenue and ARR growth.
Tightening global data privacy and compliance requirements are increasing demand for compliant, robust data management-Commvault's successful customer wins in highly regulated sectors (e.g., aerospace, insurance, government) position the company to benefit from elevated compliance-driven enterprise spending, which should help underpin revenue and recurring ARR expansion.
Rapid expansion and successful cross-sell/upsell momentum within the SaaS (Metallic) platform-evidenced by 63% SaaS ARR growth, a 45% increase in multi-product customers, and 125% SaaS net dollar retention-point to continued improvement in the quality and predictability of future revenues, directly supporting margin expansion and higher earnings visibility.
Strengthened partnerships with global cloud providers, leading cybersecurity vendors, and system integrators (e.g., Deloitte, CrowdStrike, HPE, Kyndryl, hyperscaler marketplaces) are significantly expanding market reach and lowering acquisition costs, likely increasing net new customer growth and improving net margins over time.
The transition to a recurring SaaS/subscription model-now 85% of total ARR and climbing-is transforming the revenue mix toward higher-quality, more predictable streams and reducing reliance on perpetual/legacy licensing, supporting long-term topline growth and greater earnings consistency.

Commvault Systems Earnings and Revenue Growth

Commvault Systems Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Commvault Systems's revenue will grow by 12.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.7% today to 11.6% in 3 years time.
Analysts expect earnings to reach $173.1 million (and earnings per share of $3.97) by about September 2028, up from $81.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $144 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 70.4x on those 2028 earnings, down from 101.6x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to grow by 1.68% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

Commvault Systems Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The sustained transition from traditional software licensing to a recurring subscription/SaaS-based revenue model, while driving topline growth, is noted to have a different margin profile; management guided for gross margins in the low-80% range (reflecting SaaS mix) and acknowledged that the Satori Cyber acquisition will be modestly dilutive to margins for several quarters, indicating ongoing risk of margin compression and potentially impacting overall earnings and net margin.
The strong near-term growth in subscription ARR and large "land and expand" deals may mask longer-term risk that much of Commvault's revenue momentum is coming from existing customers expanding subscriptions, rather than new logo growth, leading to possible future deceleration in net new ARR as this lever matures-potentially restricting long-term revenue growth rates.
The business's positive results are partly driven by an exceptionally robust term software quarter, including large deals closing in the final week, raising concerns about revenue linearity and deal timing. This reliance on large, lumpy deals can introduce volatility in quarterly results and impact the predictability of both revenues and earnings.
Long-term, the text's optimism about cross-selling and platform expansion depends on Commvault's ability to successfully integrate and monetize a growing number of products and recent acquisitions (e.g., Satori Cyber), which, if less successful than projected, could increase R&D and integration costs without proportionate revenue or customer gains-pressuring profitability and cash flows.
While management frequently touts market leadership and competitive displacement, they also acknowledge that the core on-premises software market is growing only at low single digits. If industry secular trends such as cloud migration and vendor consolidation accelerate, Commvault risks losing share to hyperscale platforms or fully integrated data management suites, which could structurally limit its long-term addressable market and revenue growth potential.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $208.089 for Commvault Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $225.0, and the most bearish reporting a price target of just $176.8.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.5 billion, earnings will come to $173.1 million, and it would be trading on a PE ratio of 70.4x, assuming you use a discount rate of 8.4%.
Given the current share price of $185.22, the analyst price target of $208.09 is 11.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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