Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of CyberArk Software Ltd (NASDAQ:CYBR) were down more than 15% as of 2:40 p.m. EST Monday after analysts at JPMorgan downgraded the stock following an impressive extended rally.
So what: Specifically, JPMorgan downgraded CyberArk from "neutral" to "underweight" with a price target of $42 per share -- a significant discount to its price as of this writing at just above $59 per share.
For perspective, however, CyberArk stock began its rise after analysts at William Blair upgraded the stock on Feb. 10, citing the thesis that its quarterly report would likely exceed expectations. CyberArk didn't disappoint, saying revenue in the fourth quarter climbed 81% year over year to $36.3 million, while adjusted net income per share nearly tripled to $0.21. The latter figure effectively crushed analysts' expectations for earnings of just $0.05 per share. As of the most recent close, CyberArk shares had climbed for eight consecutive sessions, and had risen around 65% over the past month, even after Monday's drop.
Now what: With shares currently trading for around 20 times trailing-12-month sales and 156 times next year's expected earnings, it's hard to argue with JPMorgan's call for caution. That doesn't mean the stock can't resume climbing from here, of course. But considering the fast and furious nature of CyberArk's recent rise, I'm perfectly content continuing to observe this one from the sidelines.
Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.