TSP Weekly Tech Stock Update—July 27, 2024
This Week: ServiceNow's AI monetization, GOOGL earnings review, Microsoft earnings preview, WDAY/CRM new AI partnership, Stifel upbeat on Datadog, CyberArk's growth path, Apple's new AI cycle & more.
Hello from Rob…
The vast majority of cybersecurity incidents these days involve stolen identity. CyberArk (CYBR, $257.68) offers an identity security platform centered on intelligent privilege controls.
Serving 8,000+ customers (including more than 55% of the Fortune 500), CyberArk enables secure access for any type of identity—including machines—to any resource or environment from any device.
CyberArk is a clear leader in privileged access management (PAM), securing privileged credentials and secrets both on-premises and in the cloud. The company primarily serves large enterprises as well as the upper end of the mid-market segment (organizations with annual revenue of at least $500 million).
An elevated threat landscape, continued migrations to the cloud and exponential growth in identities are all working to drive demand for the company’s products.
Identity security requires the correct level of privilege controls. Organizations struggle with how to assign privileges and provision access to provide each identity with the right level of security at the right time.
CyberArk is the only vendor with an identity security platform that can offer customers the flexibility to provide standing access, just-in-time access or zero standing access privileges depending on the identity type and the specific targets needed to be accessed.
In May, CyberArk announced the $1.54-billion acquisition of privately held Venafi, a machine identity management solutions vendor.
Digital transformation and cloud migrations have led to a large increase in the number of machine identities—such as workloads, code, applications, IoT devices and containers. These identities need to be managed and secured.
The Venafi acquisition provides growth synergies and expands CyberArk’s total addressable market with complementary machine identity solutions. Venafi is expected to add about $150 million of annual recurring revenue.
In 2023, CyberArk’s total revenue rose 27% to $751.9 million. For 2024, analysts on average expect total revenue to advance 24% to $935.5 million. The 2025 consensus of $1.14 billion represents growth of 22.3%.
CyberArk shares earlier this month hit a new all-time high of $284.10. The stock then pulled back along with the overall tech sector. At Thursday’s low of $249.05, the shares were off 12% from the record high.
Barclays recently raised its CyberArk price target to $315 from $280 based on it latest checks that indicated Q2 enterprise security spending held stable or improved moderately from Q1.
Rosenblatt reiterated its target of $310, saying conversations with channel partners highlighted continued healthy demand for PAM, with identity and access management remaining a top security priority. Feedback from the channel highlighted increased cross-sell into the customer base with access management, according to the firm.
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