Imperva (IMPV) posted a solid beat and raise quarter last night and has lifted the entire software security industry. Let’s take a look at the results posted by IMPV and then review some of the other players in the space.
IMPV posted earnings of $0.09 per share and that was $0.13 better than the consensus estimate. Revenues came in at $72.3M when Wall Street was expecting $68.1M and that represented year over year growth of 21%.
Guidance was strong, with the company telling Wall Street analysts that they should be raising estimates for next quarter. The Wall Street consensus for next quarter was $0.01 but the guidance calls for profits of between $0.04 and $0.06. That is a big increase!
For the fiscal year 2017, the company raised EPS guidance to $0.42-$0.47 from a previous range of $0.31-$0.34 when the consensus was calling for $033. Revenues are now expected to be $319.8M -$322.8M, up from $316M - $319M with the consensus at about $317M.
Increases in earnings estimates like this will likely drive this stock from a Zacks Rank #2 (Buy) to a Zacks Rank #1 (Strong Buy).
Other Software Security Stocks
Earlier in the week, FireEye (FEYE) posted a huge beat of $0.17 and a solid beat on top as well. The company also raised guidance for next quarter and the full fiscal year. Several brokerages raised their targets on the stock following the report including Stifel taking their target to $20 from $17.
Clearly there are some earnings estimate increases coming, but at the time of publication it doesn’t appear that they have reached the Zacks System. The detailed estimates page for FEYE (https://www.zacks.com/stock/quote/FEYE/detailed-estimates) doesn’t show any increases of yet, but you can bet they are coming.
FEYE is a Zacks Rank #3 (Hold), but I expect the rank to move higher in the coming days.
Still To Report
CyberArk Software (CYBR) is a Zacks Rank #3 (Hold) is expected to report results on May 11 after the market closes. Wall Street is looking for revenue of $57.8M and EPS of $0.23.
CYBR has an excellent history of beating the number, and really not beating the number as much as they destroy the number. That implies that Wall Street will be expecting a big beat and they will really want to post a re-acceleration of revenue growth, something we haven’t seen since the May 5, 2016 report showed. The implied year over year revenue growth rate is 23.3% and the company need to post revenue growth of more than 25% to show the coveted re-acceleration need to spike the stock.
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My Best Pick
As the Aggressive Growth Stock Strategist I look for stocks that are showing solid revenue growth with great potential for share price increases. Often times, investors will have to look at the smaller stocks to find that big growth.
At about $700M in market cap, Rapid7 (RPD) is one such name. The stock is currently a Zacks Rank #3 (Hold) but I like what I see when I look at the last years’ worth of earnings reports.
The earnings surprises have been increasing from $0.01 a year ago to $0.02, then $0.07 and the most recent beat of the Wall Street number was $0.14. Now that last beat was a really big one, but the idea is that a beat is likely and it is likely to be a decent sized one as well.
Revenues have been consistently growing in the mid 30% range to mid-40% range, so while there is a slowdown in growth, it is still rather impressive from a sector that has seen a recent resurgence.
RPD is expected to report May 9 after the close. Wall Street is looking for $44.1M on top and a loss of $0.23 on the bottom line. This comes after the company guided higher on April 11, stating that earnings will be better than the previously guided to range of -0.26 - -$0.24 and revenue better than the high end of the guided range of $42.6M to $44M.
Clearly, Wall Street is poised to see a beat, but just how big is the question. The stock was trading just south of $15 on April 10 before guidance was raised. Since that time the stock has moved to just over $17 and is now just below that level. I would not be surprised to see an outsized beat and raise quarter and this stock test the $20 range this time next week.
Rapid7, Inc. Price and Consensus
Rapid7, Inc. Price and Consensus | Rapid7, Inc. Quote
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