Commvault Systems (CVLT) Could Be 22% Undervalued As Microsoft Azure Deal Draws Focus

Microsoft partnership puts Commvault Systems (CVLT) in focus

Commvault Systems (NasdaqGS:CVLT) is in the spotlight after Microsoft agreed to offer its AI driven cyber resilience platform as a native service on Azure, integrating data protection directly into the cloud.

See our latest analysis for Commvault Systems.

The Azure agreement lands after a sharp run in Commvault Systems’ share price, with a 90 day share price return of 80.75% and a 3 year total shareholder return of 95.65%, while the 1 year total shareholder return is still down 17.85%. This mix suggests momentum has picked up recently even as some longer term holders remain under water.

If this kind of AI driven security story interests you, it can be worth widening your watchlist to see what else is gaining attention across 51 AI infrastructure stocks

With Commvault Systems now trading above the average analyst price target but carrying an indicated intrinsic discount of about 22%, investors have to ask whether there is still mispricing here or whether the market is already fully reflecting future expectations.

Most Popular Narrative: 4.8% Overvalued

Commvault Systems is trading at $141.73 against a most-followed narrative fair value of $135.20, so the market price currently sits slightly above that narrative line.

The analysts have a consensus price target of $135.2 for Commvault Systems based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analysts, you would need to believe that by 2029, revenues will be $1.6 billion, earnings will come to $195.0 million, and it would be trading on a PE ratio of 29.8x, assuming you use a discount rate of 9.0%.

Read the complete narrative.

Curious what earnings path, margin uplift and valuation multiple need to line up to support that $135.20 figure and beyond? The full narrative spells out those moving parts in detail.

Result: Fair Value of $135.20 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear pressure points for Commvault Systems, including reliance on large, uneven deals and legal actions linked to ARR disclosures that could test investor confidence.

Find out about the key risks to this Commvault Systems narrative.

Another View on Commvault Systems’ Valuation

While the narrative fair value pegs Commvault Systems at $135.20 and flags the stock as slightly overvalued, our DCF model points the other way, with a future cash flow value of $181.85. When one model says overvalued and another says undervalued, which set of assumptions feels more realistic to you?

Before leaning on either view too heavily, it is worth understanding how the cash flow based approach works and what it assumes about growth, profitability and risk. You can then compare those assumptions with your own expectations for Commvault Systems. Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Commvault Systems for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 43 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mix of optimism and concern around Commvault Systems leaves you undecided, it may help to look at the underlying data yourself and move quickly to form an independent view using the 2 key rewards and 2 important warning signs

Looking for more investment ideas beyond Commvault Systems?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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