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Analysts backpedaled Monday from a collective theory in February that cybersecurity spending would slump in 2016, while CyberArk Software ( CYBR ) garnered an upgrade on continued acquisition chatter. IBD’s 25-company Computer Software-Security industry group toppled 7.4% and 7.2% in back-to-back sessions last month after Tableau Software ( DATA ) and LinkedIn ( LNKD ) issued gloomy guidance. Since then, however, the group has rebounded 28%. “Based on conversations post-RSA, our security spending concerns have diminished,” Summit Research analyst Srini Nandury wrote in a research report Monday, referring to the annual RSA cybersecurity conference this month in San Francisco, which more than 40,000 people attended. CyberArk’s bread and butter — privileged account security — remains a top spending priority in 2016, Nandury wrote. He upgraded CyberArk stock to a buy and boosted his price target to 50 from 30. Nandury noted his upgrade is supported “with persistent chatter of CyberArk as a potential acquisition candidate, while limiting downside from current levels.” Last month, rumors arose that fellow Israeli firm Check Point Software Technology ( CHKP ) might be eyeing CyberArk. In afternoon trading on the stock market today , CyberArk stock was flat, near 38.50. The IBD security software group was also flat, hurt by a 16% plunge for NQ Mobile ( NQ ) stock. NQ announced Monday that a subsidiary of China’s Tsinghua Holdings would not be able to proceed with a planned acquisition of NQ subsidiary FL Mobile. Spending Seen Moving To CyberArk Specialty Enterprises are shifting some spending from endpoints to privileged account spending, where CyberArk leads, Nandury wrote. Surveys show cybersecurity spending at the forefront of chief information officers’ minds driven by “state-sponsored breaches and hacker collectives.” “Chief information officers understand that once hackers penetrate the perimeter, they look to hack privileged accounts (super-user and administrative accounts) to get to the data,” he wrote. “Securing privileged accounts then takes on great importance.” Nandury sees CyberArk hitting its 30% sales growth target as it aggressively expands headcount. Sales and marketing spending is expected to remain in the 35%-40% range, he says. But days before Nandury’s upgrade, William Blair analyst Jonathan Ho cut his 2017 estimates on CyberArk to take a conservative investment viewpoint. However, Ho still rates CyberArk stock at outperform. For 2017, Ho sees $1.12 earnings per share ex items vs. earlier views for $1.37. He cut pro forma operating margin to 21.2% from 26.3%, and projects 27.3% billings growth vs. earlier expectations for 33.6% growth. CyberArk’s December-quarter results were impressive, considering their difficult comparison, Ho wrote in his report. He expects CyberArk to continue market share gains against CA Technologies ( CA ) and Dell. Like Nandury, he noted that CyberArk says it hasn’t seen a drop-off in demand. A January CIO survey by Piper Jaffray shows internal access management, which includes CyberArk’s crown-jewel-protecting core, as the fifth-most-important spending target for 2016. Endpoint, compliance and Web-access firewall led the survey in terms of spending priorities. Scalper1 News
Scalper1 News