CyberArk Rally Continues After Strong Q1 Earnings

Strong earnings could already be priced into the stock

CyberArk Software Ltd. (CYBR) shares briefly reached all-time highs on Tuesday morning after the company reported first quarter financial results before the bell, but the stock gave up some of those gains later in the session. Since the beginning of the year, the stock has risen more than 65%.

First quarter revenue rose 33.6% to $95.9 million, beating consensus estimates by $3.48 million, and non-GAAP earnings per share came in at 56 cents, beating consensus estimates by 15 cents per share. The company's second quarter and full-year guidance also came in above analyst expectations, which contributed to the strong rally early in the session.

Despite the strong performance, some analysts believe that the positive results may already be priced into the stock. UBS analyst Fatima Boolani downgraded CyberArk shares from Buy to Neutral in late April, saying that the stock was trading about 70% above its historical medians across valuation metrics. However, the analyst did raise her price target from $119.00 to $132.00 per share in the same research note.

Chart showing the share price performance of CyberArk Software Ltd. (CYBR)

From a technical standpoint, the stock briefly touched the top of its long-term price channel before moving lower during the session. The relative strength index (RSI) moved into neutral territory with a reading of about 48, while the moving average convergence divergence (MACD) continues to see a bearish trend lower. These indicators suggest that the stock could continue to trade within its price channel.

Traders should watch for a rebound from trendline support toward the upper end of the price channel over the coming sessions. If the stock breaks down from the price channel and 50-day moving average, traders could see a move lower over the long term to close the gap from Feb. 14 at around $88.00.

The author holds no position in the stock(s) mentioned except through passively managed index funds.