William Blair’s Tech Insights: QUALCOMM, Inc. (QCOM), Cyberark Software Ltd (CYBR)

Analysts from William Blair weigh in on QUALCOMM, Inc. (NASDAQ:QCOM) and Cyberark Software Ltd (NASDAQ:CYBR) with mixed ratings following an investor day and an earnings report, respectively.


Following Qualcomm’s investor day last week, analyst Anil Doradla weighed in commenting that this year will be a “transitional year” for the tech company. The analyst explains, “Fiscal 2016 is a transitional year as the company attempts to work through its licensing headwinds and extracts cost efficiencies in the business.”

Even though QCOM management shed light on issues surrounding its licensing business, the analyst remains bearish on the segment. At the event, he got the sense that most of the one-off agreements signed by Qualcomm “have been centered on essential patents.” As a result, he did “not come away with any reason to be positive” on the company’s licensing segment.

The analyst also points to management’s palatable “sence of urgency to expand its addressable market by 2020.” According to Doradla, QCOM management is aggressively trying to expand its addressable market in both mobile and adjacent segments such as automotive, the Internet of Things, and data center. Doradla points to the company’s Snapdragon 820, a mobile processor, as the only reason to be incrementally positive on the company.

For the long-term, Doradla remains “concerned about the structure of the company as [he] believe[s] rapid changes in the mobile industry will pose headwinds.” Due to these difficulties, the analyst reiterated a Market Perform rating on the stock without providing a price target on February 11, 2016.

According to TipRanks, 14 analysts are bullish on QCOM while 6 remain on the sidelines. The average 12-month price target between these 20 analysts is $60.06, marking a 35% potential upside from where shares last closed.

Cyberark Software Ltd

Analyst Jonathan Ho weighed in on CyberArk after the company reported earnings on February 11. Ho summarizes that the company posted a 41.8% revenue growth; 21.2% above his estimates. He attributes the revenue beat to “strong execution and across-the-board demand for the company’s products.”

The company posted total revenue of $51.5 million, beating consensus estimates by over $7 million. Pro forma EPS was $0.39, beating estimates of ($0.20) due to “operating leverage and a discrete tax benefit.” The company posted guidance below the Street’s expectations, but Ho believes the guidance is conservative for both its revenue and EPS figures.

Ho comments, “The company’s results reflect the increasing demand for its solutions that is likely to sustain as privileged identity management becomes an increasingly important strategic purchase.” He believes the company’s products and environment “should allow it to continue exceeding expectations and driving positive estimate revisions for some time.”

Ho reiterates an Outperform rating on the company though does not provide a price target. According to the analysts polled by TipRanks, 3 are bullish on CYBR and 3 remain on the sidelines. The average 12-month price target between these 6 analysts is $47.17, marking a 44% potential upside from current levels.

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