Piper Jaffray has downgraded its stock rating of Imperva Inc. (NASDAQ:$IMPV) from ‘Overweight’ to ‘Neutral’. It also reduced the target price from $58 to $42.
The downgrade was based on four principle reasons;
- The valuation
- The potential downside to the fiscal year 2018 revenue estimate.
- A deterioration in demand trends
- The 3rd quarter resignation of the CEO and Chief Financial Officer
During trading today, shares of Imperva have dropped 5.16%, hitting $41.35.
Analyst Andrew Nowinski said that the 3rd quarter results fell from the 2nd quarter, with no reseller reporting Above Plan results. The analyst cited the resignation of the CEO and CFO as a possible cause of the disruption.
However, the change in management might help the company in the long run. The firm said that it believed that the management changes will be a net positive given the execution issues the company has sustained over the last two years. The company did admit that the changes might create a temporary disruption in the near future though.
Piper Jaffray also cited the reseller survey results, which showed weak demand for database firewalls. The low demand, however, could be the result of the long sales cycles and the fact that firewalls are typically sold by the direct salesforce instead of the channel.
The firm also set a consensus revenue estimate of $379.8 million. This would represent an 18% year-over-year growth.
The firm said, “While the company has easy comparisons in 3Q17 and 4Q17, we note that the comparisons get much more difficult in FY18. As such, we would expect a fairly significant deceleration in revenue growth in FY18.”
Multiple firms also recently weighed in on the issue;
- William Blair downgraded their rating from ‘Outperform’ to ‘Market-Perform’ in October of 2017.
- Susquehanna began coverage on the stock with a ‘Positive’ rating in June 2017.
According to MarketBeat, Imperva currently has 10 ‘Buy’ ratings and 8 ‘Hold’ ratings, giving a consensus of ‘Buy’ and a target price of $50.68.
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