Needham reduced its 12-month price target on Cellebrite (NASDAQ:CLBT) to $18.00 from $24.00 but left its Buy recommendation intact. At the time of the note, the shares were trading at $14.26, well under the range of analyst targets listed between $20 and $28.
The research note followed a set of quarterly results in which Cellebrite exceeded both revenue and earnings expectations. The company reported fourth-quarter 2025 earnings per share of $0.14 versus the consensus estimate of $0.11, a positive surprise of 27.27%. Revenue likewise came in ahead of estimates at $128.8 million compared with a forecast of $125.92 million. Despite these beats, the stock moved lower, down 2.28% in pre-market trading.
Operational metrics cited by Needham and management show continuing strength in recurring revenue and margins. Total Annual Recurring Revenue rose 21% year-over-year, or 17% when excluding the Corellium acquisition. The firm recorded an 84.2% gross profit margin and overall revenue growth of 18.56% for the period covered.
Management’s outlook for calendar 2026 calls for ARR growth of 18% to 19% year-over-year. Needham characterizes that projection as "a conservative starting point," noting several levers that could support upside: sustained demand, conversions of Inseyets, and new product attachment opportunities. External valuation metrics referenced in the note show a PEG ratio of 0.39 for CLBT.
Needham also highlighted changes in corporate finance leadership and M&A activity as noteworthy. New Chief Financial Officer Dave Barter’s initial full-year guidance, the firm said, reflects an emphasis on improving forecasting and reinstating a more conventional beat-and-raise cadence while maintaining Free Cash Flow Margin discipline. Additionally, the pending purchase of SCG Canada, which would expand Cellebrite’s footprint in the Drone Forensics market, was identified as a positive strategic move; that transaction is not included in the company’s current guidance figures.
The juxtaposition of an analyst target cut with continued operational outperformance is reflected in how the market is pricing the stock relative to analyst expectations. While Needham reduced its target, it retained a positive rating and described management’s 2026 ARR outlook as conservative — a baseline under which multiple growth drivers could materialize. The firm’s commentary also points to an emphasis on forecasting rigor and free cash flow preservation as priorities under the new finance leadership.
Context and market reaction: The company’s fourth-quarter beats, strong ARR and high gross margins underscore execution on core metrics, even as an analyst recalibration leaves the stock trading below many price targets. The pending acquisition and CFO-led operational changes are noted as incremental positives, though not yet reflected in formal guidance.