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Could ‘More Nimble’ Security Rivals Swipe Qualys’ Market Share?

DA Davidson analyst Jack Andrews likened Qualys’ ( QLYS ) disappointing Q4 to the 1994 action flick “Speed.” And even Keanu Reeves and Sandra Bullock would struggle to pilot this speeding vehicle. “Qualys reminds us of an automobile driver who is trying to simultaneously replace critical engine parts while maintaining an appropriate speed limit on a busy road,” Andrews wrote in a research note Tuesday. “There are simply too many moving parts to fully support a buy rating.” Andrews downgraded Qualys stock to neutral and cut his price target to 25 from 51. At least three other analysts slashed their price targets on Qualys stock after the cloud security vendor late Monday reported Q4 and 2015 sales that missed Wall Street views. Its Q1 guidance also lagged the consensus. Qualys stock was down 23% in afternoon trading in the stock market today , hitting a 30-month low near 17. For Q4, Qualys reported 21 cents earnings per share ex items on $44.4 million in sales, up 40% and 21.5%, respectively, from the year-earlier quarter. EPS topped expectations for 17 cents, but sales missed the consensus of 16 analysts polled by Thomson Reuters for $44.6 million. Qualys ended the year with $164.3 million in sales and 70 cents EPS ex items. Current-quarter sales guidance for $44.7 million to $45.4 million would be up 20% at the midpoint, but that’s more than $1 million short of the consensus. EPS guidance for 14-16 cents missed Wall Street views for 18 cents. New Products Could Buoy Growth Last quarter was Qualys’ slowest in more than two years, Pacific Crest analyst Rob Owens noted in a research report. Owens rates Qualys stock as sector weight. Vulnerability management (VM) comprises 78.7% of Qualys’ Q4 sales and grew 18% vs. the year-earlier quarter and 19% for the year, Credit Suisse analyst Sitikantha Panigrahi wrote in a report. Noncore products — Web application scanning, policy compliance and Web application firewall — rose 35% year over year in Q4, but decelerated sequentially from 40% growth in Q3 and 50% in Q2, Panigrahi wrote. Panigrahi reiterated his outperform rating on Qualys stock but cut his price target to 35 from 45. But Summit Research analyst Srini Nandury reiterated his buy rating on Qualys stock but dropped his price target to 35 from 50. Nandury expects at least 20% near-term sales growth on new product launches this month. The new series will be based on Qualys’ ElasticSearch capabilities and Cloud Agent platform, Qualys CEO Philippe Courtot said in the company’s earnings conference call. “Many businesses are yet to deploy VM solutions in any meaningful way,” Nandury wrote in a report. “Upcoming products are expected to contribute meaningfully by year-end.” Security Stocks Hit In High-Tech Sell-Off Yet, Pacific Crest’s Owens questioned whether Qualys could maintain its VM leadership in a tough market. IBD’s 41-company Computer Software-Security industry group closed down nearly 7.2% Monday, after falling 7.4% Friday. The group was down another fraction midday Tuesday and touched its lowest point since June 2014. “We continue to believe that Qualys is beginning to cede share to smaller, more nimble competitors in their core VM space, and that others may offer a stronger value proposition with their complementary solutions and messaging,” Owens wrote. Smaller rivals include Rapid7 ( RPD ) — a $408 million market value to Qualys’ $609 million — and privately held Beyond Security, Critical Watch, Core Security, SAINT, Tenable Network Security and Tripwire. Owens added: “While everything is ‘on sale’ in this bear market, we prefer names that could offer more upside should things stabilize.” The unstable stock environment got no help last week from weak   quarterly reports from LinkedIn ( LNKD ) and Tableau Software ( DATA ). Cybersecurity competitors Palo Alto Networks ( PANW ) and  Proofpoint ( PFPT ) were recovering somewhat Tuesday, both up 1% Tuesday afternoon, but   FireEye ( FEYE ) stock was down 2.5% Tuesday afternoon, after falling 9.5% Monday.

Qualys Slammed On Q4, 2015 Sales Miss, Sluggish Q1 Guidance

Cloud-securer Qualys ( QLYS ) more than doubled its losses from the regular stock-trading session after-hours on Monday, as it missed the consensus analyst view on Q4 and 2015 sales and offered Q1 guidance that lagged Wall Street expectations. In extended trading Monday, Qualys stock plunged 6.7% after wrapping the day down 6.1% at the closing bell. High-tech stocks toppled Monday on continued pressure following LinkedIn ( LNKD ) and Tableau ‘s ( DATA ) poorly received forecasts late last week. And stocks were widely slammed by global worries , with the price of oil again dropping to about $30 a barrel. IBD’s 41-company Computer Software-Security industry group closed Monday down 7.2% after ending Friday down 7.4%. Shares of Proofpoint ( PFPT ), FireEye ( FEYE ), CyberArk Software ( CYBR ) and Palo Alto Networks ( PANW ) also suffered Monday and closed the day down 10.3%, 9.5%, 9% and 9.3%, respectively. For its Q4 ended Dec. 31, Qualys reported $44.4 million in sales and 21 cents in earnings per share excluding items, up 21% and 40%, respectively. EPS minus items easily topped the consensus of 16 analysts polled by Thomson Reuters for 17 cents, but sales were slightly short of Wall Street expectations for $44.6 million. Qualys wrapped the year with 70 cents EPS ex items on $164.3 million in sales, up 52% and 23%, respectively, year over year. Sales fell short of the consensus view for $164.4 million, but EPS minus items topped projections for 66 cents. In both cases, Q4 and 2015 sales were in line with Qualys’ prior guidance, but EPS minus items topped the high end of earlier views. Current-quarter guidance for $44.7 million to $45.4 million and 14-16 cents EPS ex items would be up 20% and flat, respectively, at the midpoints of the outlook. But both views missed the consensus model for $46.3 million and 18 cents. Qualys stock hit an all-time high of 55.47 on May 4, 2015, but plunged nearly 33% the next day after missing Q2 expectations. Since then, shares have fallen another 39%.

Yelp Plunges After Out-Early Report Shows Key Metrics Slowed

Online consumer-review website Yelp ( YELP ) sank on Monday, in a tumultuous market, after posting Q4 earnings that showed a decline in the rate of growth of cumulative review and local ad accounts. Also, its CFO is on his way out. In addition to forecasting full-year 2016 sales growth of about 26% year over year at the midpoint of guidance, Yelp guided adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $90 million to $105 million, up from $69.1 million in 2015. Analysts polled by Thomson Reuters had modeled 2016 adjusted EBITDA of $106.82 million. Yelp stock was down 12% in early afternoon trading in the stock market today , near 16. Yelp stock is down 63% from where it was trading last year and is down nearly 83% from its all-time high of 101.75 brushed in early March 2014. The company’s earnings were released several hours in advance of its scheduled time on Monday due to “a vendor error by PR Newswire.” A conference call with analysts is scheduled for after the close. Growth in three key metrics slowed. Cumulative reviews grew 34% from a year earlier to 95 million, after growing 35% in Q3. Local advertising accounts grew 32% to 111,00 vs. 37% in Q3.  App unique devices, or the number of unique mobile devices accessing Yelp’s apps, grew 38% to 20 million vs. 39% in Q3. Yelp claims that app users “were more than 10 times as engaged as website users based on number of pages viewed.” Diners seated via reservation platform SeatMe rose 120% year over year. Yelp is facing competition in online reviews from multiple fronts — including from Facebook ( FB ), Apple ( AAPL ), Amazon.com ( AMZN ) and Alphabet ( GOOGL )-owned Google — as other websites build or buy their own databases of user-generated reviews to attract viewers. Yelp also competes with online travel agency TripAdvisor ( TRIP ) and Priceline Group ( PCLN ), the world’s largest Web travel-service company. Thomson Reuters noted Yelp’s Q4 EBITDA as coming in light of the consensus analyst estimate: $17.54 million vs. the $21.9 million that analysts had anticipated. Yelp posted Q4 EPS ex items of 11 cents, down 40% year over year. Yelp reported that revenue rose 40% year over year to $153.7 million. That exceeded the $152.35 million that analysts polled by Thomson Reuters had wanted to see. “We are pleased with the progress we made on the key initiatives we set at the beginning of 2015,” said Yelp CEO Jeremy Stoppelman in a statement. “We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.” Yelp guided Q1 revenue of $154 million to $157 million, up 31% year over year at the midpoint. Analysts have been expecting $154.4 million. The company announced that its chief financial officer, Rob Krolik, will be stepping down “in the coming months.” The company said it will start looking for a new CFO immediately. Yelp stock opened Monday at 17.08, down 5.6% from Friday’s close. Shares spiked briefly to 18.84 around the time of the midsession earnings release, then quickly dropped to the vicinity of 16. Yelp, LinkedIn ( LNKD ) and others “are trading lower due to Facebook and Google’s competitiveness,” said Chilton Capital Management economist Samuel Rines, in an email to IBD.