Should Investors Rethink CyberArk After 72% Rally and AI Security Expansion in 2025?

If you have been keeping an eye on cybersecurity stocks lately, CyberArk Software has likely caught your attention. It is no secret the company has been on a remarkable run, with shares gaining 38.9% so far this year and an eye-popping 71.7% in the past twelve months. Even stretching back five years, CyberArk’s stock is up more than 377.3%. This performance has outpaced most tech peers and reflects investor confidence in both its platform and the ever-increasing demand for robust digital security.

What is driving these sustained gains? While the broader tech sector has benefited from renewed risk appetite and shifts in market leadership, CyberArk appears to have gained further momentum from a global surge in cybersecurity spending. In an era marked by high-profile cyber attacks, companies and governments are committing more resources than ever to security. This ongoing investment continues to push optimism higher for well-established leaders like CyberArk.

With such strong price appreciation, however, investors naturally wonder whether the stock still offers value, or if valuations have become stretched. By the numbers, CyberArk currently earns a valuation score of 0 out of 6, meaning it does not appear undervalued under any of our standard checks. But as with many growth stocks, headline valuation ratios do not always tell the full story.

Next, we will break down the key valuation approaches and what they show for CyberArk Software. In addition, there will be a perspective on valuation that goes beyond the usual metrics and might make all the difference for your investing decisions.

CyberArk Software scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: CyberArk Software Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s dollars. This method helps investors judge whether a stock’s price reflects its real long-term earning power.

For CyberArk Software, analysts estimate the company generated a Free Cash Flow (FCF) of $209 million over the last twelve months. Projections forecast robust growth, with FCF expected to reach $1.03 billion by the end of 2029. It is important to note that analyst coverage mainly extends five years out; projections beyond that rely on reasoned estimates to continue the trend through 2035.

Based on the latest DCF model, CyberArk’s intrinsic fair value is calculated at $331.64 per share. However, when this figure is compared to the company’s recent market price, the DCF suggests the stock is currently about 40.6% overvalued.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CyberArk Software.

Our Discounted Cash Flow (DCF) analysis suggests CyberArk Software may be overvalued by 40.6%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: CyberArk Software Price vs Sales

For many software companies that are rapidly growing but not yet consistently profitable, the Price-to-Sales (P/S) ratio is often the most relevant valuation metric. This is because revenue growth tends to be a reliable sign of progress for such firms, even if earnings fluctuate due to heavy investment in future expansion. What investors are really watching is whether a company is capturing market share and scaling successfully, making P/S a valuable tool for assessment.

Growth expectations and risks are essential considerations in determining what a typical or fair P/S ratio should be. Companies with huge future growth prospects and moderate risks can justify higher P/S ratios, while slower-growing or riskier businesses deserve lower values.

Currently, CyberArk trades at a P/S ratio of 19.59x. This stands well above both the software industry average of 5.21x and the average among its closest peers at 9.49x. However, Simply Wall St's proprietary “Fair Ratio” for CyberArk, which considers multiple relevant factors like its growth outlook, profit margins, market cap, and associated risks, is 10.65x.

Relying on the Fair Ratio offers a more balanced benchmark than just a basic industry or peer comparison, as it adjusts for company-specific strengths and unique risks, giving investors a much clearer sense of true value.

Given that CyberArk’s market P/S multiple is significantly above its Fair Ratio, the stock currently appears overvalued according to this approach.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CyberArk Software Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story or perspective about a company. It is where you combine your unique assumptions about CyberArk’s future, such as expected revenue, profit margins, and business risks, into a forecast and a fair value. Narratives let investors connect the company's story to actual financial estimates, making the sometimes abstract concept of value both personal and actionable.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to define their own outlook for companies like CyberArk. By comparing their Narrative-driven fair value to the current share price, users can decide if now is the right time to buy or sell. Narratives are also updated automatically when new facts emerge, such as product launches, earnings results, or industry news, giving you a dynamic and always-relevant view.

For example, if you believe CyberArk will capture new market share thanks to AI-driven identity security and successful integrations, your Narrative might support the highest analyst price target of $551.00. If you are more cautious about integration risks and competition, your Narrative could align with a lower price target, like $415.00. Narratives allow you to invest with a story you truly believe in and adjust it as the story evolves.

Do you think there's more to the story for CyberArk Software? Create your own Narrative to let the Community know!

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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