On Oct 7, 2014, Zacks Investment Research upgraded security software provider Imperva Inc (IMPV) to a Zacks Rank #1 (Strong Buy). Expanding product portfolio, strong returns of 23.4% over the past three months on improving results and a positive outlook makes Imperva an attractive investment opportunity.
Why the Upgrade?
Imperva’s SecureSphere Data Security Suite and cloud-based security services aim to protect sensitive data from hackers. Over 3,300 customers in more than 90 countries rely on Imperva’s solutions to safeguard their business.
Although Imperva is yet to report a profit, its revenues have shown steady growth in the recent past. In second-quarter 2014, Imperva’s net revenues increased 22.7% year over year to $38.4 million. Loss per share of 59 cents was much better than the Zacks Consensus Estimate of a loss of 72 cents.
Better-than-expected results were primarily driven by robust new customer addition (175 in the quarter), higher number of $100,000 deals (88) and improving subscription revenues. Imperva also provided a positive outlook, as it raised the revenue guidance and lowered the loss per share forecast for fiscal 2014.
Growing cyber-attacks in data centers and cloud services present meaningful growth opportunities for Imperva. Recent attacks on Home Depot, Target, JP Morgan Chase (JPM), eBay (EBAY) and Apple (AAPL) iCloud indicate significant vulnerabilities in both areas that hackers can exploit.
Per market research firm Gartner, worldwide spending on information security is expected to increase 7.9% year over year to $71.1 billion this year. In 2015, this is further expected to jump 8.2% to $76.9 billion.
Imperva’s expanding product portfolio keeps it well positioned to gain from this higher spending. SecureSphere WAF for Amazon Web Services was made available in June. Imperva expects the number of customers for this product to reach double-digits in the very first full quarter of availability.
During the second quarter, Imperva launched Skyfence Cloud Gateway 3.0, which helps enterprises to automatically identify, manage and unmanage mobile devices. Imperva’s subsidiary Incapsula launched two new services to guard against large-scale denial-of-service (DDoS) attacks.
Earnings Estimate Revision
The Zacks Consensus Estimate for 2014 has remained stable at a loss of 39 cents per share over the last 30 days. For fiscal 2015 too, the Zacks Consensus Estimate remained unchanged at a loss of $2.28 per share over the same time frame.
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