Qualys Trading at a Discount: Is This the Right Time to Buy the Stock?

Qualys, Inc. QLYS has been a notable laggard in the cybersecurity space in 2024, with its stock plunging 32% year to date (YTD). This significant decline starkly contrasts with the performance of its industry peers, including Fortinet FTNT, CyberArk Software CYBR and Palo Alto Networks PANW, which have shown relative resilience. Shares of FTNT, CYBR and PANW have gained 64.9%, 45.5% and 27.7%, respectively, YTD.Despite this setback, Qualys' current valuation metrics present an attractive opportunity for value-conscious investors. At a forward 12-month price-to-earnings (P/E) multiple of 23.14X, Qualys trades at a significant discount compared to the Zacks Security industry average of 131.07X.This valuation is also well below peers like Fortinet, CyberArk Software and Palo Alto Networks, which have P/E multiples of 41.1X, 90.32X and 58.14X, respectively. Additionally, Qualys’ price-to-sales (P/S) ratio is markedly lower than the industry average, further underscoring its undervalued status.For value-oriented investors, this discrepancy is hard to ignore. The discount stems from the sharp decline in QLYS shares this year. However, this decline could present an attractive entry point, especially for those seeking exposure to the cybersecurity space at a reasonable price.Qualys, Inc. Price and Consensus Qualys, Inc. price-consensus-chart | Qualys, Inc. QuoteQualys’ Strong Financial FoundationDespite the stock’s underperformance, Qualys’ financial performance remains robust. In the third quarter of 2024, the company reported revenues of $153.9 million, reflecting 8% year-over-year growth. Adjusted EBITDA came in at $69.7 million, representing an impressive margin of 45%. These figures highlight Qualys’ ability to maintain profitability even as it invests in growth initiatives.Moreover, Qualys’ non-GAAP net income of $58 million for the quarter underscores its strong earnings potential. Its consistent cash flow generation allows Qualys to fund strategic investments without jeopardizing financial stability, a trait not all cybersecurity companies can boast.Qualys’ robust third-quarter performance has boosted analysts’ confidence. The Zacks Consensus Estimate for 2024 and 2025 earnings has witnessed upward revision over the past 60 days. The consensus mark for fiscal 2025 earnings has moved up by 28 cents to $5.85 per share, while for fiscal 2026 it has increased to $6.02 from $5.82 60 days ago.Qualys’ Growth Opportunities in Emerging SolutionsQualys has been actively diversifying its product portfolio to drive future growth. Emerging solutions such as TotalCloud and TotalAI are gaining traction, which are contributing significantly to the company’s top-line growth. These innovations cater to evolving customer needs for cloud-native security and AI-driven insights, positioning Qualys to capture new market opportunities.The company’s Vulnerability Management, Detection and Response (VMDR) solution continues to lead its portfolio, accounting for a significant portion of revenues. Qualys’ focus on enhancing its offerings, including cloud security, endpoint protection and compliance solutions, ensures its relevance in an increasingly competitive cybersecurity landscape.According to a Fortune Business Insights report, the global cybersecurity market is projected to witness a compound annual growth rate of 14.3% through 2032, driven by the rise in cyberattacks and regulatory compliance requirements. As a leading player in the vulnerability management space, Qualys is well-positioned to benefit from this trend. Its robust platform and expanding product portfolio make it a preferred choice for enterprises seeking integrated security solutions.Why Now is the Time to Buy QLYS Stock?Qualys’ current valuation provides an appealing entry point for investors. The stock’s forward 12-month P/E multiple of 23.14X is significantly lower than that of its peers and the broader industry, suggesting that the market may be underestimating its growth potential. Additionally, the company’s strong financial performance, innovative product offerings and expanding market reach position it for a rebound.While the YTD decline in QLYS stock has been disappointing, it has created a rare opportunity to buy a high-quality cybersecurity company at a discounted price. For investors with a long-term perspective, Qualys’ fundamentals and growth prospects outweigh its recent underperformance.With strong growth drivers, including innovative solutions like TotalCloud and TotalAI and increasing cybersecurity demand, Qualys is well-positioned for a turnaround in 2025. Investors seeking value and growth in the cybersecurity sector should consider adding QLYS stock to their portfolios. QLYS stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fortinet, Inc. (FTNT): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report Qualys, Inc. (QLYS): Free Stock Analysis Report CyberArk Software Ltd. (CYBR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks