Proofpoint, Inc. (PFPT) — which carries CFRA's highest recommendation of 5-STARS, or Strong Buy — is a leading cybersecurity company that enables large- and mid-sized organizations to protect employees' work from advanced threats and compliance risks, notes equity analyst Keith Snyder in CFRA Research's flagship newsletter, The Outlook.
Its platform provides a secure email gateway, advanced threat protection, security awareness training, threat intelligence, email authentication, email encryption, data loss prevention, digital risk protection, archiving, and threat response capabilities.
Our Strong Buy recommendation reflects our strong growth outlook, supported by the current work-from-home environment and a rapid rise in targeted email attacks. Email attacks are by far the most common attack vectors used by hackers.
According to Verizon, 94% of malware is delivered via email, while phishing attacks account for more than 80% of reported security incidents.
The Covid-19 outbreak has created a new set of challenges, with many employees working from home and devices no longer sitting on corporate networks. According to Capgemini Research, spear-phishing email attacks related to Covid-19 increased 667% between the February/March 2020 timeframe.
We see Proofpoint benefitting from this onslaught of attacks, which will force customers to continue investing in network security tools.
Following 23.9% revenue growth in 2019, we expect 16.7% growth in 2020 and 16.6% growth in 2021. Revenue growth will continue to be supported by strong demand for Proofpoint's advanced threat solutions, an increase in add-on activity, and a renewal rate in excess of 90%.
The rapidly changing threat landscape, an accelerating transition to the cloud, and the migration to Microsoft Office 365 are the key secular trends that are helping drive demand for Proofpoint's full suite of security and compliance solutions.
Our 12-month target price of $140 applies an EV/sales multiple of 6.6x to our 2021 estimate, comparable to the peer average at 6.7x and its 10-year historical average multiple at 6.4x, reflecting our strong revenue growth outlook and our view that Proofpoint will continue to capture market share.