It has been a tough week for shareholders of Ping Identity (PING), which operates an identity software platform. The company announced the follow-on offering of 6 million shares from one of its major investors, Vista Equity Partners. The deal was struck at $24 but has swiftly tumbled on the news. Stocks are now fetching $23.70 – which is quite a bit short of the 52-week high — and the market capitalization is $1.9 billion.
Ping Identity came public back on September 29. On the debut, the stock price rose by 34%. With so many tech companies coming public, Ping Identity has gotten lost in the noise. Yet this may present an opportunity for investors. (See Ping stock chart on TipRanks)
Backgrounder on Ping Identity
Ping Identity has actually been around for nearly 20 years, and this is perhaps one of its biggest issues for Wall Street. The company has had to transition its technology to the cloud, which has not been easy or cheap.
Nonetheless, the effort is starting to gain traction. Ping Identity now has a comprehensive platform that helps companies achieve zero trust security for the use of corporate IT systems. This can be done either via SaaS (software as a service), mobile, the cloud or on-premise. For the most part, Ping Identity is built for the complex needs of enterprises.
Artificial Intelligence (AI) and machine learning (ML) have also been key. These technologies have made it possible to detect unusual activity in real-time. It can do this in a way that does not interfere with a seamless user experience.
Significant Tailwinds for Ping
No doubt, there are a myriad of tailwinds for Ping Identity’s business. First of all, there is the trend towards digital transformation. This has required tools like identity management to help with the different software systems.
Next, with the Covid-19 pandemic, companies have had to deal with remote workforces. But this has added another layer of complexity to IT. Who is really logging on to a system? Well, with Ping Identity, this is much easier to monitor.
And finally, the number of cybersecurity threats continues to rise rapidly. It seems that every day there is a new ransomware incident. So yes, cybersecurity protection is a must-have.
As CEO Andre Durand noted on the latest earnings call, “With over 3.5 billion connected individuals and more than 350 billion digital identities connected to millions of applications, the challenge for enterprises to connect the right users to the right applications with speed and ease has never been greater.”
Wall Street’s Take
Turning to the analyst community, Ping Identity stock has 4 Buys and 4 Holds that have been assigned in the past three months. So, the shares are a Moderate Buy. At $31.21, the average analyst Ping Identity price target implies 37% upside potential.
Bottom Line On Ping Identity
In the latest quarter, Ping Identity posted a 16% increase in revenues to $266.3 million and operating cash flows came to $24.1 million. The dollar-based net retention rate was 109%.
True, the top-line is not too impressive. But then again, the past couple of quarters have seen an acceleration and the company has raised its guidance. The fact is that the cloud business is starting to move the needle—and this should allow for stronger long-term growth.
The valuation on Ping Identity stock is certainly attractive, at least compared to other enterprise software companies. Currently the shares trade at about 8 times revenues. By comparison, rival Okta (OKTA) is at a hefty 32X.
So for investors looking for a way to get exposure to the growth in cybersecurity, Ping Identity does look like an interesting option right now.
Disclosure: Tom Taulli does not have a position in Ping Identity stock.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
