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Cybersecurity firm Imperva ( IMPV ) topped analysts’ Q4 views, but its strangled current-quarter and 2016 guidance sent its shares to nose-diving to a 10-month low on Wall Street Thursday. Imperva stock was down 14% in midday trading on the stock market today , near 42.50, earlier falling as low as 41.81, after the company’s late Wednesday earnings report. At least four analysts cut their price targets on Imperva stock. For Q4, Imperva reported 20 cents earnings per share ex items on $72.7 million in sales, topping analysts projections for 15 cents and $68.1 million, and topping the company’s earlier view for 10-16 cents and $66 million to $68 million. Sales rose 41% year over year, and EPS minus items swung from a four-cent loss in the year-earlier quarter. Imperva wrapped up the year with $234.3 million in sales, up 43%, and 11 cents EPS ex items, swinging from a 74-cent loss in 2014. Both measures beat Wall Street expectations and the company’s forecast three months ago. Imperva’s Q1 Losses Expected To Deepen Current-quarter and 2016 guidance was a mixed bag. For Q1, Imperva sees $58 million to $60 million in sales and a 26-32 loss per share ex items. The sales view roughly met the consensus for $59.8 million, but Wall Street was expecting losses of just 11 cents a share ex items. On a year-over-year basis, Q1 sales would be up 32% at the midpoint of guidance, but losses would stagnate or deepen from 26 cents in the year-earlier quarter. Imperva guided 2016 sales at $302 million to $307 million, which would be up 30% at the midpoint. In September, Imperva saw 25% growth in 2016. But the EPS ex items view for 20 cents missed the consensus model for 30 cents, Summit Research analyst Srini Nandury wrote in a research report. Nandury and Piper Jaffray analyst Andrew Nowinski separately blamed the guidance flop on Imperva’s plan to invest more heavily in sales and marketing as well as research and development to gain market share. Both expect that Imperva’s guidance was conservative. Major breaches drove massive growth in earlier quarters and years, Nowinski wrote in a research report. But that “panic buying” has slowed, he says. “It is becoming clear that in the absence of ‘panic buying,’ the security space can still deliver strong top-line growth, but that growth will come at a higher-than-expected cost,” he wrote. Nowinski maintained his overweight rating on Imperva stock but slashed his price target to 54 from 84. Nandury dropped his price target to 70 from 80 but reiterated a buy rating on Imperva stock. Subscription Sales Drive Top Line Subscription revenue of $14.9 million, up 105%, drove Imperva’s top line, Nowinski wrote. The number of $100,000-plus deals grew 15.4% vs. the year-earlier quarter, “and the company did more seven-figure deals than in the entire history of the company.” William Blair analyst Jonathan Ho suggested long-term investors take advantage of Imperva’s stock weakness. Imperva stock is down 33% in 2016. “The fundamentals appear strong,” Ho wrote in a report. “However, we concede there will likely be some continued short-term volatility for security stocks in general due to challenging market conditions.” IBD’s 26-company Computer Software-Security industry group was down 2% midday Thursday and is down 20% for the year, earlier in the day touching a 16-month low. Palo Alto Networks ( PANW ) and CyberArk Software ( CYBR ) lead the group with Composite Ratings of 81 and 80, respectively, out of a best-possible 99. Imperva stock has a CR of 47. Image provided by Shutterstock . Scalper1 News
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