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CyberArk Software Gains on Baird Upgrade on Security Opportunity

Baird says CyberArk's commitment to its privileged account management (PAM) business is the right move in this climate.
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Shares of CyberArk Software  (CYBR) - Get CyberArk Software Ltd. Report were rising Wednesday after analysts at Baird Equity Research upgraded the stock to outperform from market perform while maintaining a $170 price target. 

The firm says it appreciates the cybersecurity company's commitment to making its privileged account management (PAM) business a higher priority amid increased interest in that segment. Privileged access management refers to technology that controls and monitors internal privileged user activity. 

"Partner feedback suggests PAM as a higher-priority spend area in 2021, which we have been expecting given the recent threat landscape," analyst Jonathan Ruykhaver said. "While we acknowledge this model transition may be bumpy and certainly creates near-term noise, we believe it will serve CyberArk's investors well in the long run."

CyberArk shares were rising 0.9% to $136.72 in early trading Wednesday. 

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The PAM segment has exploded amid the work-from-home revolution that has occurred in response to the COVID-19 pandemic and subsequent lockdown. Working from home and off company networks makes employees more vulnerable to cyber attacks

Baird's channel checks suggest that the company's partners are expecting to see a benefit from the Sunburst cyber attack that targeted software made by SolarWinds. Partner feedback suggests that PAM is a higher priority in 2021 relative to 2020 and Baird's checks show that CyberArk is the leading vendor in the space. 

"We believe the biggest takeaway from the SUNBURST attack (and other attacks leveraging zero-day exploits) is that once the vulnerability was installed in SolarWinds' software, there does not appear to be much customers could have done to prevent a breach. As such, we see no clearer example of the need for robust PAM programs," Ruykhaver said.