CyberArk (NASDAQ:CYBR) has grown extensively, in tandem with companies’ need for cybersecurity. The value of CYBR stock has doubled in recent months. Also, the October swoon of the Nasdaq that punished most tech equities left CybeerArk stock largely unscathed.
Despite this resilience, the attractiveness of CYBR stock still may appear to be questionable. However, after analyzing CYBR’s financial metrics and the value proposition offered by CyberArk stock, I think this mid-cap equity is still worth buying.
Can the Rally of CYBR Stock Continue?
CyberArk provides security for many companies’ most critical systems. Industries such as healthcare, financial services, and retail have deployed CyberArk’s software to protect their systems.
Meanwhile, CYBR stock has enjoyed something that has escaped most other tech stocks in recent months: growth. Since hitting a low in the low $40 per share range in late 2017, CyberArk stock has risen steadily. Instead of falling as most tech stocks did in October, CYBR stayed in a range, and today CYBR stock is above its early-October highs.
The only question now is how long the rally can continue. Early indications imply that the rally of CyberArk stock can last for the foreseeable future. The company’s profit growth remains robust. Analysts on average expect its profits to increase by 51.7% in fiscal 2018. They predict that its profit growth will slow to 10.2% in 2019. Still, analysts forecast average annual profit growth of 33.2% for CYBR between 2020 and 2025.
CYBR Stock Is Expensive, But It’s Worth the Price
CYBR stock has more than doubled in value over the last 13 months. As a result, the forward price-earnings ratio of CyberArk stock has risen to 43.8. While that may seem high, it’s reasonable, in light of the company’s average annual growth rate of 33.2%.
Also, CYBR stock has a market cap of just $3.1 billion. That compares to Symantec’s (NASDAQ:SYMC) market cap of $13.1 billion and the $17.1 billion market cap of Check Point Software (NASDAQ:CHKP). As a result, the rally of CyberArk stock may only have just started.
As the development of technology progresses, the role of CyberArk will only grow in importance. For now, IT systems store data critical to our lives such as medical records and financial statements. Before too long, IT systems will probably carry out other, vital tasks, such as driving cars and even performing surgical procedures. At that point, keeping these systems secure will literally become a matter of life and death.
Moreover, the advent of 5G will bring CyberArk’s software into more of these systems. 5G will also likely lead to new applications that we have not yet imagined. Consequently, we probably do not yet know the revenue-generating potential of CyberArk’s products.
CYBR stock is not cheap. However, with its low market cap, high growth rates, and a multiple that’s reasonable in light of its growth, I think that CYBR stock is the equity of choice in the cybersecurity field.
The Bottom Line on CYBR Stock
Investors should consider CYBR stock both because of its value and its value proposition. CyberArk software plays a critical role in securing vital technology. Its software will only become more important as technology advances.
Many investors may assume that it’s too late to buy CyberArk stock simply because the value of the stock has more than doubled since late 2017. However, after the rally, the forward price-earnings ratio of CYBR stock is just over 40. Given that CYBR is expected to grow at a 30%-plus annual rate over the next few years, investors will receive large amounts of growth in exchange for that high multiple.
Considering its essential role in securing both healthcare and financial information, CYBR stock currently offers value to investors. However, once 5G launches, new technologies not yet imagined by most investors will proliferate. For that reason, investors should consider not only the current metrics of CYBR, but also its tremendous future potential.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.