Investing.com–Jeffereries has raised its price target on CyberArk Software (NASDAQ:), citing a favorable 2025 environment for annual recurring revenue (ARR) growth and optimism around the Venafi acquisition.
The brokerage increased its target from $340 for the cybersecurity company to $400.
CyberArk’s 2025 ARR expectations, including Venafi, imply 20% year-over-year growth, in line with the company’s conservative projections. Jefferies expects CyberArk to guide ARR growth in the low 20% range from 2025 onwards, with a gradual upward trend throughout the year.
Recently acquired Venafi offers significant cross-selling opportunities for CyberArk, Jefferies analysts said in a note. “We remain bullish on Venafi, but acknowledge that it will take time to ramp up its growth profile and advise investors to temper expectations in the near term,” analysts wrote.
If 10% of CyberArk’s existing customers adopt Venafi solutions, it could add $85 million in ARR, Jefferies analysts said, adding that they view this as “very prudent.”
CyberArk expects free cash flow margins of 21%-22% in 2024, a notable improvement from 7% in 2023. Jefferies expects further FCF inflection in 2026 and 2027 as the transition to Service as a Software (SaaS) matures, with an FCF of 26% is predicted. margin in 2027.
The conversion of maintenance customers to SaaS remains a key driver, analysts say. With a two- to three-fold increase in ARR from these conversions, CyberArk has a substantial opportunity to increase revenue over the next two years, she added.
Overall, Jefferies remains optimistic about CyberArk’s growth trajectory and its ability to capture opportunities in emerging markets.
