Wunderlich Sees Room For Proofpoint To Guide Higher

Wunderlich’s Bill Choi believes “the acceleration of market share gains, as well as continued upsell of TAP (targeted attack protection) and diversification toward archiving and governance, should help Proofpoint Inc (NASDAQ: PFPT) garner a high multiple and warrant a material premium to the group.”

Choi maintains a Buy rating on the company, with a price target of $90.

Beat Results Expected

The analyst expects Proofpoint to report its revenue and EPS ahead of the estimate and the consensus when the company announces its Q4 results Thursday.

The beat is likely to have been driven by billings growth of more than 40 percent to almost $140 million, ahead of the guidance range of 35–37 percent growth.

“We believe PFPT has become more efficient at converting McAfee enterprise customers onto its platform, with better migration tools and more experience,” Choi mentioned.

Guidance Could Be Raised

The analyst expects McAfee conversions to prove to be an even larger opportunity in 2017 than it was in 2016.

“Given our expectations of strong billings and pipeline, we see potential for guidance to exceed consensus,” Choi went on to say.

The analyst expects Proofpoint to slightly increase its initial FY 2017 guidance of revenue of $480 million–$485 million and EPS of $0.45–$0.49.

In addition, the Q1 guidance is expected to be ahead of the consensus expectations.

“There is seasonality to billings, and Q1 billings guidance could be near our $130 million estimate,” the analyst added.