Pacific Crest Downgrades Imperva, Expects Longer Than Expected Delay For Performance To Improve

Imperva Inc’s (NYSE: IMPV) fundamentals “continue to be challenged” and an improvement in the company’s performance would likely take longer than expected by the Street, Pacific Crest’s Rob Owens said in a report. He downgraded the rating on Imperva to Sector Weight, commenting that the company’s shares could come under pressure if a sale is not consummated soon.

Shares Appear Elevated

On August 4, Imperva had announced details of its weaker-than-expected Q2 results. Despite this, shares appreciated 3.6 percent, probably on management's comments indicating the commencement of a review of strategic alternatives, analyst Owens mentioned.

Shares now represent “a less compelling investor return profile,” and would come under pressure if the company is unable to find a suitor in the near term, since there seems to be “no chance” a meaningful improvement in fundamentals anytime soon, Owens stated.

Prolonged Turnaround

During Q2, Imperva’s performance was adversely impacted by declining deal sizes, prolonged sales cycles and difficult comps.

“While management had previously attributed its success and strong pipeline build to its depth of management and vigilance building pipeline, the majority of the team praised on the fourth quarter conference call are no longer with the company,” the analyst pointed out, adding that this created a difficult backdrop for any rebound in performance in the near term.

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