DA Davidson raised its price target on CyberArk Software (NASDAQ:CYBR) to $573.00 from $518.00 while keeping a Buy rating following the vendor's fourth-quarter results. That new target is the highest among analysts covering the stock, according to the firm, even as the shares trade at $381.72. Data from InvestingPro cited in relation to the company shows CyberArk trading above its assessed Fair Value despite notable revenue momentum of 36% over the past year.
The quarter produced revenue of $372.7 million, operating profit of $75.0 million and diluted earnings per share of $1.33. Revenue came in slightly ahead of DA Davidson's expectation, while operating profit and EPS missed the firm's internal projections. Over the trailing twelve months the company has a diluted EPS of -$2.93, meaning it has not been profitable on a full-year basis; however, consensus analyst projections reported via InvestingPro indicate expectations for a profitable fiscal year ahead, with an EPS forecast of $5.48.
Subscription revenue was a dominant contributor, at $310.5 million or 83% of total revenue, growing 28% year-over-year and beating DA Davidson's subscription estimate of $306.8 million. Total recurring revenue - which aggregates subscription and maintenance income - reached $356.0 million, representing 96% of overall revenue and expanding 22% year-over-year. Those recurring revenue figures are consistent with CyberArk's reported five-year revenue compound annual growth rate of 24% and its strong gross profit margin of 76.45%.
On profitability metrics, the company delivered operating margins of roughly 20%. That level was slightly below DA Davidson's estimate of 21.5%, the firm noted, attributing the shortfall to higher cost of goods sold and elevated research and development spending in the quarter. Free cash flow proved stronger than anticipated at $121.7 million, equivalent to a 33% margin, versus an expectation of $109.7 million and a 30% margin.
DA Davidson highlighted that subscription and total net new annual recurring revenue (ARR) achieved record highs in the quarter. Per the firm's calculations, those ARR measures were growing organically at an annualized rate in the vicinity of 20-30% year-over-year.
Beyond the quarterly numbers, a major corporate development is shaping market attention: CyberArk shareholders have overwhelmingly approved the company's acquisition by Palo Alto Networks, with approximately 99.8% voting in favor. That transaction, which was first announced in July 2025, is expected to close in the second half of Palo Alto Networks' fiscal year 2026, subject to regulatory approvals.
Brokerage reactions to the results and the pending takeover have been mixed. JPMorgan downgraded CyberArk from Overweight to Neutral while increasing its price target to $474, saying the current share price already reflects the pending acquisition. Jefferies likewise moved to a Hold rating and left its price target at $480 after Palo Alto Networks updated the acquisition timeline to the third quarter of its fiscal 2026 year. Separately, Stifel reiterated a Buy rating on Cloudflare, citing the expanding demand for AI security solutions to address risks such as unauthorized use and data loss - a development the firm sees as relevant to the broader security market.
On the product front, CyberArk has introduced new tools intended to help organizations prepare for the planned reduction in Transport Layer Security (TLS) certificate lifespans, a change expected to have meaningful implications for IT costs. The company characterized the new offerings as a response to shifting certificate management requirements and the associated operational impact.
The combination of strong subscription growth, high recurring revenue proportions, healthy gross margins and robust free cash flow underpinned DA Davidson's decision to raise the price target, even as the firm notes near-term operating margin pressure from cost of goods sold and R&D. Market participants and other brokers are taking the pending Palo Alto Networks acquisition into account in their ratings and targets, and regulatory clearance remains a gating factor for the deal to close.