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As you might know, CyberArk Software Ltd. (NASDAQ:CYBR) last week released its latest quarterly, and things did not turn out so great for shareholders. It was a pretty negative result overall, with revenues of US$107m missing analyst predictions by 4.8%. Worse, the business reported a statutory loss of US$0.41 per share, much larger than the analysts had forecast prior to the result. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, CyberArk Software's 18 analysts are now forecasting revenues of US$507.1m in 2021. This would be a meaningful 13% improvement in sales compared to the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.29 per share in 2021. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$548.1m and earnings per share (EPS) of US$0.46 in 2021. There looks to have been a significant drop in sentiment regarding CyberArk Software's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.
The average price target was broadly unchanged at US$122, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on CyberArk Software, with the most bullish analyst valuing it at US$143 and the most bearish at US$100.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that CyberArk Software's revenue growth is expected to slow, with forecast 13% increase next year well below the historical 22%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% next year. Factoring in the forecast slowdown in growth, it looks like CyberArk Software is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting CyberArk Software to become unprofitable next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on CyberArk Software. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for CyberArk Software going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for CyberArk Software that you need to take into consideration.
This article by Simply Wall St is general in nature. 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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