NEW YORK (TheStreet) -- CyberArk Software (CYBR) shares are soaring 23.28% to $4.65 Wednesday morning on reports that Israeli cyber security firm Check Point Software Technologies (CHKP) is in initial talks to acquire the company, Reuters reports, citing Israel's financial newspaper, TheMarker.
CyberArk is currently valued at about $1.2 billion.
If the transaction is successful, it would be Check Point's largest acquisition to date.
So far, Check Point has acquired cyber security startup Hyperwise and Lacoon Mobile Security, both of which are two small Israeli companies.
However, officials at both companies have declined to comment on the potential buyout bid, Reuters added.
On Wednesday morning, shares of Check Point are rallying 1.74% to $80.12.
Based in Israel, CyberArk Software develops, markets, and sells software-based IT security solutions that protect organizations from cyber attacks in the U.S. and internationally.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CYBERARK SOFTWARE LTD as a Sell with a ratings score of D. This is driven by a few notable weaknesses, 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 area that we feel has been the company's primary weakness has been its poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was trading a year ago, CYBR's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The gross profit margin for CYBERARK SOFTWARE LTD is currently very high, coming in at 86.96%. Regardless of CYBR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 16.90% trails the industry average.
- When compared to other companies in the Software industry and the overall market, CYBERARK SOFTWARE LTD's return on equity is below that of both the industry average and the S&P 500.
- CYBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.34, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 380.95% to $4.02 million when compared to the same quarter last year. In addition, CYBERARK SOFTWARE LTD has also vastly surpassed the industry average cash flow growth rate of -8.31%.
- You can view the full analysis from the report here: CYBR