Jefferies Increases Price Target for CyberArk Software

Investing.com—Jefferies has increased its price target for CyberArk Software (NASDAQ: CYBR) from $340 to $400, citing a favorable 2025 setup for annual recurring revenue (ARR) growth and optimism surrounding the Venafi acquisition.

CyberArk’s 2025 ARR expectations, including Venafi, indicate a 20% year-on-year growth, in line with the company’s conservative projections. Jefferies anticipates that CyberArk will guide for low-20% ARR growth to begin 2025, with gradual increases throughout the year.

The recently acquired Venafi presents significant cross-selling opportunities for CyberArk. Analysts at Jefferies remain bullish on Venafi but caution that it will take time to ramp up its growth profile and advise investors to have tempered near-term expectations.

If 10% of CyberArk’s existing customers adopt Venafi solutions, it could contribute an additional $85 million in ARR, which Jefferies views as a prudent expectation.

Furthermore, CyberArk expects free cash flow margins of 21%-22% in 2024, a substantial improvement from 7% in 2023. Jefferies predicts further cash flow improvement in 2026 and 2027 as the service as a software (SaaS) transition matures, forecasting a 26% FCF margin by 2027.

The transition of maintenance customers to SaaS is a crucial driver for growth. Analysts noted a potential two to three-fold uplift in ARR via these conversions, highlighting that CyberArk has a major opportunity to enhance revenue in the next two years.

In summary, Jefferies maintains a positive outlook on CyberArk’s growth trajectory and its ability to seize emerging market opportunities.