Last Update 14 Dec 25

CYBR: Future Will Balance AI Security Upside And Acquisition Execution Risks

Analysts have modestly raised their price target on CyberArk Software to $502 from $440, reflecting confidence in the strategic value of the pending Palo Alto Networks acquisition and the company’s positioning within a consolidating, AI driven cybersecurity landscape, even as slightly lower margin assumptions temper the upside.

Analyst Commentary

Street research around the pending Palo Alto Networks acquisition highlights a generally constructive view on CyberArk’s strategic value, but also underscores a more balanced risk reward profile now that upside is more tightly linked to deal execution and integration.

Bullish Takeaways

Bullish analysts view the CyberArk acquisition as a cornerstone of Palo Alto’s broader platformization and AI security strategy. They see it as reinforcing the durability of CyberArk’s privileged access management franchise within a larger cloud and network security stack.
Positive industry feedback around the deal is seen as validation that CyberArk’s technology remains best in class. This supports the notion that the takeout multiple and new price target embed a premium for scarce, category leading assets.
Ongoing demand for cybersecurity exposure, particularly in AI linked use cases, is cited as a tailwind for CyberArk’s underlying growth trajectory within the combined entity. This dynamic is viewed as a possible justification for upside to longer term revenue and cash flow assumptions.
The lack of comparable, high quality SMID cap cyber stories is interpreted as evidence that CyberArk’s strategic scarcity value is not fully reflected in prior stand alone valuations. This view lends support to the reset price target tied to the transaction.

Bearish Takeaways

Bearish analysts argue that with the stock now effectively anchored to the agreed takeout terms, the risk reward has compressed. This is cited as warranting a move to more neutral ratings despite a higher absolute target price.
Some caution that recent rotation into other cyber names, as investors reallocate away from CyberArk ahead of deal closing, signals limited near term upside. In their view, incremental multiple expansion is constrained by the acquisition cap.
Questions around integration risk and timing, including Palo Alto’s concurrent M&A activity, introduce execution uncertainty that could pressure pro forma margin and growth assumptions if synergies are slower to materialize.
A subset of investors is wary that rising sector valuations, described as increasingly frothy in adjacent cyber assets, may also imply a more fragile backdrop for sustaining elevated multiples on CyberArk’s eventual contribution to Palo Alto’s consolidated results.

What's in the News

Canaccord downgraded CyberArk to Hold from Buy while raising its price target to $502 from $440, citing the pending Palo Alto Networks takeover as a cap on upside (Canaccord research note).
CyberArk announced general availability of its Secure AI Agents Solution, extending its Identity Security Platform with privilege controls designed to secure rapidly proliferating AI agent identities across SaaS, cloud, and developer environments (company product announcement).
The company expanded discovery and context capabilities across its Machine Identity Security portfolio, adding centralized visibility, risk dashboards, certificate management, and policy enforcement tools to help secure rapidly growing machine identities driven by AI and cloud adoption (company product announcement).
CyberArk scheduled a special shareholders meeting for November 13, 2025 in Petach Tikva, Israel, with an agenda focused on considering the Palo Alto Networks merger and related transactions (company meeting notice).

Valuation Changes

Discount Rate has risen slightly to 10.83%, up from 10.78%. This implies a modestly higher required return and marginally lower present value of future cash flows.
Revenue Growth has increased slightly to 18.60%, compared with 18.56%, reflecting a marginally stronger top line outlook.
Net Profit Margin has fallen slightly to 3.81%, from 4.08%, indicating somewhat more conservative assumptions around near term profitability.
Future P/E has risen modestly to 423.1x, from 394.5x. This suggests a higher valuation multiple on forward earnings despite the small reduction in margin expectations.
Fair Value remains unchanged at $485.47, as offsetting adjustments to growth, margin, and discount rate assumptions net out in the updated model.

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.What are the underlying business or industry changes driving this perspective?

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 Earnings and Revenue Growth

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.

Pending Acquisition Will Shape AI Security Position Amid Mixed Industry Outlook