Morgan Stanley: 'US Treasury Hack Fallout: Why CYBR Is a Major Beneficiary'

Morgan Stanley analyst Hamza Fodderwala reiterated an Equalweight rating and $316.00 price target on CyberArk Software (NASDAQ: CYBR)

The analyst comments "The US Treasury department disclosed a material state sponsored breach from access gained via BeyondTrust, a major competitor to CYBR, which should benefit given BeyondTrust has nearly 20% share in the PAM market. More broadly, this should keep security top of mind for the Federal govt. What Happened: Yesterday, it was announced hackers connected to the Chinese government breached several Treasury Department workstations and accessed unclassified documents, according to a letter sent to Congress on Monday (full details here). The hackers gained access by overriding security controls from a 3rd party provider, BeyondTrust, which is a major competitor to CyberArk in the Privileged Access Management (PAM) space (see Exhibit 1 ). In mid-December, BeyondTrust had identified a vulnerability in their Remote Support and Privileged Remote Access products (both self-hosted and cloud) and have since released a patch and notified customers (full details here). Quantifying the Impact: We estimate potential 1-2pts tailwind to CyberArk's ARR growth over the next few years, further solidifying their dominance in the PAM market. 1) Market share gain: In July, BeyondTrust CEO shared the company had surpassed $400M ARR. We estimate the majority of this is derived from their PAM offering (>$300M), growing mid-teens (slightly below market), implying $40-50M in net new ARR annually. 2) Replacement opportunity with US Treasury could be mid-high single digit millions in ARR, based on our estimate and >100K employees at the department. Further, this likely positions CyberArk as the preferred PAM provider for US government. More broadly, state-sponsored attacks have been escalating in recent weeks. This includes several US telcos recently targeted as part of the Salt Typhoon breach connected to China. While recent concerns around DOGE/Fed spending cuts could have a marginal impact, events like these should keep security spend top of mind for US Federal agencies under the incoming administration."

For an analyst ratings summary and ratings history on CyberArk Software click here. For more ratings news on CyberArk Software click here.

Shares of CyberArk Software closed at $319.60 yesterday.

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