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Here is What Could Unlock Valuation for Commvault Systems (CVLT)

Commvault Systems Inc. (NASDAQ:CVLT) is one of the 10 best cybersecurity stocks to invest in according to analysts.

On April 21, Scotiabank initiated coverage of Commvault Systems Inc. (NASDAQ:CVLT), assigning the stock a Sector Perform rating and a price target of $105. In the firm’s view, the competitive landscape in the data protection, backup, and cyber recovery market is quite aggressive.

Copyright: bialasiewicz / 123RF Stock Photo

The firm noted that the company faces the risk of witnessing its topline growth being derived mainly from leveraging its huge installed base, instead of a more sustainable new logo traction. The firm also believes that the consensus 2027 targets for Commvault do not inspire too much confidence.

The company’s valuation metrics in case of a potential acquisition are also what is driving this investment story. Back on April 13, Oppenheimer observed that an opportunity to acquire Commvault Systems Inc. (NASDAQ:CVLT) exists because of the attention given by Thoma Bravo. In terms of current market makeup, a financial buyer is more likely to acquire the company, considering that the top six players within the segment control nearly 70% of the market share.

According to the firm, acquisition by Rubrik is unlikely to be a good fit from a strategic point of view. The firm also highlighted Cohesity, which bought Veritas recently and has already started the post-deal technological integration. It is very likely that Veeam will make a bid as they aim to enter large enterprise markets. From the valuation point of view, Oppenheimer believes that acquiring Commvault at a 15 times EV/FCF multiple will be a wise investment. This would imply a stock price of $125-$130, offering roughly 40% premium to the prevailing market price. Currently, the firm rates Commvault stock as Outperform with a target price of $150, leading to an upside of almost 65%.

Commvault Systems Inc. (NASDAQ:CVLT) is a cybersecurity and data protection company that delivers data recovery and protection services. Through its Operational Recovery function, it offers data backup, recovery, and workload mobility solutions covering on-premises, hybrid, and multiple cloud environments.

While we acknowledge the risk and potential of CVLT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVLT and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

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