UPDATE: KnowBe4 Inc. (KNBE) Closing the Valuation Gap with other SAAS Companies, BofA Securities Initiates at Buy
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BofA Securities initiates coverage on KnowBe4 Inc. (NASDAQ: KNBE) with a Buy rating and a price target of $24.00 based on 15x 2022E EV/Sales. KnowBe4 offers a cloud-based security training platform for employees with a rich content library of training videos, tests, and phishing simulations which are targeted to specific customer verticals and lines of business. The company reported an impressive 45% revenue growth rate in CY20, driven by +20% growth of new customer additions and by upselling new products to existing customers, which supports the strong dollar-based net retention rate of 103%.
The analyst stated "KnowBe4’s stock trades at roughly 10x 2022E EV/sales, with an expected growth rate of 28% and 25% in 2021/2022, respectively. General SaaS software vendors trade at 13-15x EV/Sales, while security-focused SaaS vendors, like CrowdStrike, Zscasler and Okta, trade at 24-25x levels. While we believe some discount to cloud-centric security providers is warranted as KNBE is primarily a training company, we think the valuation gap will narrow over time. We note that KnowBe4 is only 5% penetrated on a global basis, and the competitive landscape is favorable. Lastly, KnowBe4 has been cash flow positive since inception, with FCF/sales of about 18%."
Shares of KnowBe4 Inc. closed at $18.69 yesterday.
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