Last Update 28 Nov 25
CYBR: Future Will Reflect Mixed Reactions As Acquisition Moves Toward Completion
Analysts have modestly increased their price target for CyberArk Software to $502 from $440, citing improved industry dynamics and positive sentiment around the pending acquisition by Palo Alto Networks.
Analyst Commentary
Analyst reactions to CyberArk Software’s latest developments reveal a mix of optimism and caution. Perspectives center primarily on the company’s valuation, the strategic impact of the pending Palo Alto Networks acquisition, and potential growth opportunities within the cybersecurity landscape.
Bullish Takeaways- Bullish analysts highlight the strong strategic rationale and anticipated long-term benefits from the acquisition by Palo Alto Networks. They point to favorable industry feedback and alignment with major growth trends.
- Positive sentiment stems from CyberArk’s positioning in the rapidly expanding AI security market. Early indicators suggest the company is poised to capture significant opportunity.
- The increased price target for CyberArk reflects improved industry dynamics and confidence in execution post-acquisition. This reinforces the view that the company stands to benefit from broader platformization strategies in cybersecurity.
- Bearish analysts express concern over CyberArk’s valuation, downgrading the stock to reflect the premium paid in the pending takeover. They suggest near-term upside may be limited.
- Some skepticism remains about the timing and strategic fit of recent acquisitions within the sector. Concerns include potential integration risks and uncertainty over the breadth of product differentiation.
- The possibility of capital outflows from CyberArk, as investors seek other cybersecurity plays in response to the acquisition, also weighs on sentiment. This is particularly notable given growing caution around elevated valuations in the sector.
What's in the News
- Canaccord downgraded CyberArk to Hold from Buy and raised the price target to $502 in response to the pending acquisition by Palo Alto Networks (Canaccord).
- CyberArk launched the Secure AI Agents Solution, introducing industry-first privilege controls to secure AI agent identities. The solution offers features including comprehensive agent discovery, secure access, and real-time threat detection.
- Enhancements to CyberArk’s Machine Identity Security portfolio include automated discovery and context capabilities for certificates, keys, and secrets. These updates are designed to reduce risk and simplify compliance as machine identities increase significantly.
- CyberArk will hold a Special Shareholders Meeting on November 13, 2025, to consider the company’s merger and related transactions.
Valuation Changes
- Fair Value: Remains steady at $485.47, indicating analysts see little change in intrinsic valuation following the recent developments.
- Discount Rate: Decreased marginally from 10.80% to 10.78%, reflecting a slight reduction in perceived risk or cost of capital.
- Revenue Growth: Increased modestly from 18.52% to 18.56%, suggesting a slightly more optimistic outlook for future sales expansion.
- Net Profit Margin: Dropped slightly from 4.22% to 4.08%, pointing to a small reduction in expected profitability.
- Future P/E: Fell notably from 440.40x to 394.47x, indicating expectations for improved earnings or a tempered view on premium valuation.
Key Takeaways
- Strategic acquisitions and R&D in AI and machine identities bolster CyberArk's identity security offerings, enhancing revenue through cross-selling and market expansion.
- Focus on unified identity security platform and machine identity market positions CyberArk for significant growth and improved margins as customers consolidate identity solutions.
- Integration risks with acquisitions, increasing market competition, and evolving cybersecurity threats could impact CyberArk's financial performance and operational complexity.
Catalysts
About CyberArk Software- Develops, markets, and sells software-based identity security solutions and services in the United States, Europe, the Middle East, Africa, and internationally.
- The integration of Venafi and Zilla Security into CyberArk is expected to enhance its competitive position in identity security, allowing for revenue growth through cross-selling opportunities within its existing customer base and expanding its total addressable market.
- The acquisition of Zilla Security is aimed at addressing longstanding inefficiencies in identity governance administration (IGA), which is expected to reduce operational complexity and improve CyberArk's net margins by offering faster deployment and integration than traditional IGA solutions.
- The evolving machine identity market, coupled with CyberArk’s focus on AI-driven identity security through its machine identity capabilities and Secrets Management, is expected to drive significant revenue growth as organizations seek integrated solutions to manage increasingly complex identity security needs.
- CyberArk's unified identity security platform, which includes privileged access management and workforce security, is expected to drive higher average deal sizes, revenue growth, and improved net margins as customers increasingly consolidate their identity security solutions with trusted vendors.
- Ongoing investment in research and development, especially in areas like AI and machine identities, is set to provide CyberArk with innovative solutions to capture new market opportunities, boosting future earnings through product differentiation and improved customer trust.
CyberArk Software Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming CyberArk Software's revenue will grow by 19.9% annually over the next 3 years.
- Analysts assume that profit margins will increase from -13.8% today to 4.7% in 3 years time.
- Analysts expect earnings to reach $96.6 million (and earnings per share of $2.13) by about September 2028, up from $-165.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $128.2 million in earnings, and the most bearish expecting $-83.6 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 397.9x on those 2028 earnings, up from -138.9x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 10.87%, as per the Simply Wall St company report.
CyberArk Software Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The integration of Venafi and Zilla Security into CyberArk's operations presents execution risks which could impact the company's ability to achieve projected synergies and financial outcomes, potentially affecting revenue and net margins.
- Increasing competition in the identity security market and pressure to expand its platform rapidly could lead to increased operational complexity, adversely impacting earnings if not managed properly.
- The cybersecurity landscape is highly dynamic, with evolving threats and the need for quick adaptation. Delays or missteps in product development or market response due to these complexities could negatively affect customer adoption and revenues.
- The dependency on SaaS applications and cloud environments involves significant risk related to security and regulatory changes, which could impact operational costs and net margins if not effectively addressed.
- The company faces potential macroeconomic uncertainties, such as fluctuating currency rates which impacted ARR by $2 million as mentioned, affecting overall earnings and financial stability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $462.534 for CyberArk Software 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 $551.0, and the most bearish reporting a price target of just $415.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.1 billion, earnings will come to $96.6 million, and it would be trading on a PE ratio of 397.9x, assuming you use a discount rate of 10.9%.
- Given the current share price of $455.55, the analyst price target of $462.53 is 1.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- 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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