It’s been a sad week for CyberArk Software Ltd. (NASDAQ:CYBR), who’ve watched their investment drop 14% to US$119 in the week since the company reported its annual result. CyberArk Software reported US$434m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.62 beat expectations, being 3.2% higher than what analysts expected. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on CyberArk Software after the latest results.
Taking into account the latest results, the most recent consensus for CyberArk Software from 20 analysts is for revenues of US$515.5m in 2020, which is a solid 19% increase on its sales over the past 12 months. Statutory earnings per share are forecast to tumble 50% to US$0.83 in the same period. Before this earnings report, analysts had been forecasting revenues of US$510.7m and earnings per share (EPS) of US$1.60 in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$140, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on CyberArk Software, with the most bullish analyst valuing it at US$160 and the most bearish at US$122 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to CyberArk Software’s performance in recent years. It’s pretty clear that analysts expect CyberArk Software’s revenue growth will slow down substantially, with revenues next year expected to grow 19%, compared to a historical growth rate of 25% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 12% next year. So it’s pretty clear that, while CyberArk Software’s revenue growth is expected to slow, it’s still expected to grow faster than the market itself.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CyberArk Software. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$140, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that in mind, we wouldn’t be too quick to come to a conclusion on CyberArk Software. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple CyberArk Software analysts – going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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