Ping's Post-Earnings Reaction Quite Opposite From Wall Street's Views

Ping Identity Holding Corp. (NYSE: PING) released its fourth-quarter financial results after the markets closed on Thursday. While results were solid, investors still sent shares lower. Analysts took the other side of this trade and see this stock potentially breaking out from here.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying after the fact.

Ping posted $0.14 in adjusted earnings per share (EPS) and $68.2 million in revenue, compared with consensus estimates that called for $0.10 in EPS and $65.7 million in revenue. In the same period of last year, it reported a net loss of $0.03 per share and $59.49 million in revenue.

During the most recent quarter, annualized recurring revenue was $224.9 million and represented a 23% increase year over year. Subscription revenue for the quarter was $64.0 million, an increase of 14%.

It looks like some of the hyper-growth investors wanted stronger guidance than its ranges of $60.5 million to $62.5 million in first-quarter sales and annual sales of $263 million to $273 million. The consensus had called for sales of about $53.3 million in the first quarter and full-year sales of almost $266 million. The company is also targeting its total annualized recurring revenue in the range of $228.5 million to $230.5 million.

Merrill Lynch reiterated its Buy rating and raised its price objective to $30 from $28.50. The firm continues to favor the importance of Identity Security in a Zero Trust world, as well as Ping’s sticky enterprise customer base and the upside potential of new products. Also noted is that the 2020 guidance may prove to be conservative. Tal Liani, the analyst behind that call, has an investment rationale that said:

Ping is a leader in the Identity Access Management market which is becoming increasingly attractive. As network perimeters disappear with cloud app migration and mobile users, Identity is a constant which becomes more important for security. Ping is a leader in workforce identity management and consumer identity management, and both are high growth opportunities. We expect Ping to gain traction with new products, shift increasingly to SaaS and achieve leverage in the operating model beyond 2020.

Credit Suisse reiterated its Outperform rating and raised its target price to $30 from $28. That report noted that 38 customers now spend over $1 million annualized with Ping, a gain of 52% from a year ago, with strong cross-selling opportunities driving consistent net retention rates. The Credit Suisse report said:

We see Ping as a key beneficiary of the shift towards hybrid cloud architecture, as users and applications become increasingly distributed and the trust provided by legacy network security can no longer be relied upon.

The other analysts who follow Ping Identity seemed to have more positive things to say than the share price reaction may have indicated.

  • Oppenheimer reiterated its Outperform rating and raised its target price to $30 from $22.
  • RBC Capital Markets rates it as Outperform and raised its target price to $29 from $27.
  • Stifel reiterated its Buy rating and raised its target price to $28 from $24.

Andre Durand, Ping’s founder and CEO, commented on the results:

We are pleased with our fourth quarter results, and continued momentum with large enterprise customers deepening their adoption of Ping Identity’s Intelligent Identity Platform. Our unmatched deployment flexibility and experience partnering with customers to solve mission critical challenges remains a key differentiator in why enterprises choose to partner with us… Since our Initial Public Offering in September, Ping Identity has successfully deployed solution enhancements across our portfolio, landed additional Fortune 1000 customers, bolstered our leadership teams in sales and marketing, and benefited from the additional public markets exposure to further the reach of our brand. We are excited to continue to partner with enterprises as they undergo their modernization, cloud transformation, and identity security initiatives.

Ping stock traded down about 3.5% at $22.54 on Thursday, in a 52-week range of $15.22 to $29.80. The consensus price target is $27.82.

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