On Wednesday, Piper Sandler adjusted its shares of outlook on shares of Qualys (NASDAQ:QLYS), a provider of cloud security and compliance solutions, by reducing the price target to $115 from the previous $116 while maintaining an underweight rating on the stock.
The decision comes in the wake of the company's second-quarter short-term billings falling short of market expectations. The firm pointed out that increased deal scrutiny had negatively affected upsell opportunities during the quarter. This was compounded by the discontinuation of a solution by Microsoft (NASDAQ:MSFT) Defender, which also impacted Qualys' performance.
Qualys has experienced a decline in its net revenue retention (NRR) for the fifth consecutive quarter. Despite these setbacks, the company managed to sustain double-digit growth in new business for the fourth consecutive quarter, largely due to successful partnerships. This silver lining, however, was not enough to offset the lowered forecast for full-year revenue growth, which is now anticipated to be around 8% at the midpoint.
The company's stock is currently trading at approximately 20 times its projected calendar year 2025 free cash flow (CY'25E FCF). Given this valuation and the lowered estimates, Piper Sandler reaffirmed its underweight stance on Qualys shares. The new price target of $115 reflects the firm's adjusted expectations based on the company's recent performance and market conditions.
In other recent news, cloud security firm Qualys has experienced a series of noteworthy developments. The company's second quarter financial results showed an 8% year-over-year increase in revenue. However, it also reported a 2% decline in current calculated billings. Despite these mixed results, Qualys has been making strides in expanding channel partnerships and growing its platform customer base.
Analysts at Canaccord Genuity have adjusted their outlook on Qualys, reducing their price target from $220 to $160, while maintaining a Buy rating. Similarly, RBC Capital and JPMorgan (NYSE:JPM) have revised their price targets for the company to $150 and $125, respectively. These changes were made in light of the company's recent financial outcomes and future projections.
Qualys has also announced the launch of TruRisk Eliminate, a product designed to enhance vulnerability management. In addition, the company is planning to expand its GovCloud platform into more federal agencies. These recent developments reflect Qualys' ongoing efforts to innovate and expand its market reach.
The company's first quarter performance of 2024 revealed a 12% increase in revenue, reaching $145.8 million, primarily due to the adoption of its VMDR solution with TruRisk. Qualys anticipates an 8-10% increase in full-year revenue for 2024, projecting figures between $601.5 million and $608.5 million. These are all recent developments, and investors should monitor further updates.
InvestingPro Insights
Qualys (NASDAQ:QLYS) appears to be navigating a challenging period as reflected in the recent price target adjustment by Piper Sandler. For investors considering the stock, it's worth noting some key financial metrics and InvestingPro Tips that could provide a broader context. As of the last twelve months leading up to Q2 2024, Qualys holds a market cap of $5.06 billion and has demonstrated a robust gross profit margin of 81.5%. This impressive margin underscores the company's ability to maintain profitability despite market headwinds.
Moreover, Qualys has an adjusted P/E ratio of 29.61, which indicates that the stock is trading at a lower price relative to near-term earnings growth—a potential sign of undervaluation. However, it's also trading at a high Price/Book multiple of 11.84, which may suggest a premium compared to the book value of its assets. While the company's stock has taken a hit with a -30.15% year-to-date total return, it's important to note that Qualys is profitable over the last twelve months, with a solid return on assets of 21.51%.
InvestingPro Tips highlight that Qualys holds more cash than debt on its balance sheet, which could provide financial flexibility in uncertain times. Additionally, analysts predict the company will be profitable this year, which aligns with its performance in the recent past. For those interested in further analysis, there are 12 additional InvestingPro Tips available, offering deeper insights into Qualys' financial health and market position.
For investors looking to make an informed decision on Qualys, these metrics and additional insights from InvestingPro can be found at https://www.investing.com/pro/QLYS.
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