Why Imperva (IMPV) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Imperva Inc. (IMPV) are down 35.65% to $32.00 on Thursday.

The data security company was downgraded to "perform" from "outperform" at Oppenheimer. The firm also removed their $65 price target after the company released its Q1 warning.

"Our downgrade is driven by negative Q1 pre-announced, driven mainly by U.S. weakness," Oppenheimer analyst Shaul Eyal said.

"Increased competition for greater $100 thousand deals, our belief the fixing period this time could exceed a quarter and elevated execution risk as Imperva is also in the midst of integrating two companies acquired in Q4'13," were all factors that led to the ratings downgrade, the analyst said.

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TheStreet Ratings team rates IMPERVA INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate IMPERVA INC (IMPV) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 1202.3% when compared to the same quarter one year ago, falling from -$0.72 million to -$9.43 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, IMPERVA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • IMPERVA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IMPERVA INC reported poor results of -$1.02 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings (-$0.81 versus -$1.02).
  • The gross profit margin for IMPERVA INC is currently very high, coming in at 81.60%. Regardless of IMPV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IMPV's net profit margin of -22.06% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly increased by 2215.33% to $7.55 million when compared to the same quarter last year. In addition, IMPERVA INC has also vastly surpassed the industry average cash flow growth rate of -5.52%.
  • You can view the full analysis from the report here: IMPV Ratings Report

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