Needham & Company Reiterates Buy on Proofpoint (PFPT) Following Strong 3Q
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Needham & Company reiterated a Buy rating and $88.00 price target on Proofpoint (NASDAQ: PFPT) following the company's 3Q earnings report. PFPT’s $99.8m FCF and $0.19 EPS were well above the consensus estimates of $94.3m and $0.05. Billings of 125m were well ahead of $116m consensus. PFPT expects to be consistently profitable in CY17, which will up sharecount materially to 55.8m, up from JuneQ’s 41m shares. EPS estimates of $28-0.33 is well ahead of CY17 consensus of $0.09.
Analyst Scott Zeller commented, "The PFPT quarter was strong, and even better than expected for a company viewed as best-in-class in security. While many companies in security are navigating the “cooling” of IT Security spending to pre-bubble levels, PFPT sailed through 3Q with +48% y/y billings growth and +44% y/y revenue growth – both metrics are an acceleration from last quarter and a year ago. PFPT is benefiting from several drivers, including (a) MSFT 365 adoption, (b) secular move to cloud, (c) cross selling of TAP, which is in 30% of base and “pulls forward” renewals. The previous CY17 outlook was upped slightly for revenue, and we believe MFE transition revenue isn’t yet in estimates. Shares recently traded +11% aftermarket to $77.20, which is 8.5x EV/ CY17 revenue and 37x EV/CY17 FCF. Our $88 target is 10x EV/CY17 revenue. Maintain BUY and $88 PT."
Shares of Proofpoint closed at $69.78 yesterday.
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