Last Update 29 Oct 25
Fair value Increased 0.70%Analysts have modestly increased CyberArk Software's price target to $473.55. They cite the anticipated takeover by Palo Alto Networks and the strategic potential of the acquisition, even in light of recent industry downgrades.
Analyst Commentary
Recent analyst commentary reflects a divided view on the implications of CyberArk Software's pending acquisition by Palo Alto Networks. While some analysts point to strategic and market growth benefits, others have tempered their outlooks due to acquisition dynamics and sector trends.
Bullish Takeaways- Bullish analysts highlight that the acquisition positions Palo Alto Networks strongly within the emerging AI security landscape, where early indications suggest leadership potential and long-term growth opportunities.
- The acquisition is viewed as offering strategic rationale, with favorable industry feedback supporting expectations for significant synergies and enhanced market share.
- Platform strategies, especially those emphasizing comprehensive cybersecurity offerings, are gaining traction. These strategies are expected to drive continued revenue and free cash flow growth, including pro forma figures that exceed previous expectations.
- Bearish analysts have downgraded CyberArk’s rating in light of the pending takeover and cite a lack of significant upside potential following the acquisition announcement.
- There is an expectation of investor outflows from CyberArk as the acquisition proceeds, which could lead to volatility and strength in competing cybersecurity names.
- Several research firms caution that the premium priced into CyberArk shares may fully reflect the anticipated deal value, limiting further near-term appreciation.
- Mixed industry feedback and concerns over frothy sector valuations may temper expectations for sustained outperformance after the acquisition.
What's in the News
- Canaccord downgraded CyberArk to Hold from Buy and raised the price target to $502, reflecting the pending takeover by Palo Alto Networks (Periodicals).
- CyberArk announced significant enhancements to its Machine Identity Security portfolio, providing automated discovery, policy enforcement, and management capabilities as organizations face increased machine identity risks (Key Developments).
- CyberArk scheduled a Special/Extraordinary Shareholders Meeting for November 13, 2025, in Petach-Tikva, Israel (Key Developments).
- Optiv successfully deployed CyberArk's Workforce Identity Security solution, migrating over 2,500 employees in under 30 days without disrupting business operations (Key Developments).
- CyberArk is participating in a national NIST-led DevSecOps project and is joining technology leaders like Google, Microsoft, and Palo Alto Networks to enhance software supply chain security (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has risen slightly from $470.27 to $473.55.
- Discount Rate has decreased marginally from 10.87% to 10.84%.
- Revenue Growth projections remain nearly unchanged, shifting from 19.89% to 19.88%.
- Net Profit Margin has fallen modestly from 4.53% to 4.33%.
- Future P/E has increased from 417.29x to 439.56x. This reflects changed market expectations for earnings.
Key Takeaways
- Strategic acquisitions and R&D in AI and machine identities bolster CyberArk's identity security offerings, enhancing revenue through cross-selling and market expansion.
- Focus on unified identity security platform and machine identity market positions CyberArk for significant growth and improved margins as customers consolidate identity solutions.
- Integration risks with acquisitions, increasing market competition, and evolving cybersecurity threats could impact CyberArk's financial performance and operational complexity.
Catalysts
About CyberArk Software- Develops, markets, and sells software-based identity security solutions and services in the United States, Europe, the Middle East, Africa, and internationally.
- The integration of Venafi and Zilla Security into CyberArk is expected to enhance its competitive position in identity security, allowing for revenue growth through cross-selling opportunities within its existing customer base and expanding its total addressable market.
- The acquisition of Zilla Security is aimed at addressing longstanding inefficiencies in identity governance administration (IGA), which is expected to reduce operational complexity and improve CyberArk's net margins by offering faster deployment and integration than traditional IGA solutions.
- The evolving machine identity market, coupled with CyberArk’s focus on AI-driven identity security through its machine identity capabilities and Secrets Management, is expected to drive significant revenue growth as organizations seek integrated solutions to manage increasingly complex identity security needs.
- CyberArk's unified identity security platform, which includes privileged access management and workforce security, is expected to drive higher average deal sizes, revenue growth, and improved net margins as customers increasingly consolidate their identity security solutions with trusted vendors.
- Ongoing investment in research and development, especially in areas like AI and machine identities, is set to provide CyberArk with innovative solutions to capture new market opportunities, boosting future earnings through product differentiation and improved customer trust.
CyberArk Software Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming CyberArk Software's revenue will grow by 19.9% annually over the next 3 years.
- Analysts assume that profit margins will increase from -13.8% today to 4.7% in 3 years time.
- Analysts expect earnings to reach $96.6 million (and earnings per share of $2.13) by about September 2028, up from $-165.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $128.2 million in earnings, and the most bearish expecting $-83.6 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 397.9x on those 2028 earnings, up from -138.9x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 10.87%, as per the Simply Wall St company report.
CyberArk Software Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The integration of Venafi and Zilla Security into CyberArk's operations presents execution risks which could impact the company's ability to achieve projected synergies and financial outcomes, potentially affecting revenue and net margins.
- Increasing competition in the identity security market and pressure to expand its platform rapidly could lead to increased operational complexity, adversely impacting earnings if not managed properly.
- The cybersecurity landscape is highly dynamic, with evolving threats and the need for quick adaptation. Delays or missteps in product development or market response due to these complexities could negatively affect customer adoption and revenues.
- The dependency on SaaS applications and cloud environments involves significant risk related to security and regulatory changes, which could impact operational costs and net margins if not effectively addressed.
- The company faces potential macroeconomic uncertainties, such as fluctuating currency rates which impacted ARR by $2 million as mentioned, affecting overall earnings and financial stability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $462.534 for CyberArk Software based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $551.0, and the most bearish reporting a price target of just $415.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.1 billion, earnings will come to $96.6 million, and it would be trading on a PE ratio of 397.9x, assuming you use a discount rate of 10.9%.
- Given the current share price of $455.55, the analyst price target of $462.53 is 1.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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