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Qualys Stock Plunges 36% Year to Date: Should You Buy the Dip?
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Qualys (QLYS - Free Report) , a prominent player in the cybersecurity space, has plunged 36.3% year to date after reaching its all-time high in December 2023. The Zacks Security industry in which the stock belongs has declined 11.9% year to date.
After reaching all-time highs, its continuous decline raises the question: is it time to buy, hold, or sell?
Image Source: Zacks Investment Research
What Triggered Qualys' Decline?
The underperformance of Qualys’ shares can be attributable to highly volatile market conditions amid the ongoing macroeconomic uncertainties. Factors, including investors’ concerns over the Federal Reserve's interest rate policies and fears of a looming U.S. recession, have weighed on the cybersecurity stocks and that has not spared Qualys either.
Additionally, Qualys’ sluggish sales growth has made investors cautious about its near-term prospects. The company’s revenue growth rate decelerated to a single-digit percentage range in second-quarter 2024 compared with a strong double-digit percentage growth rate it has registered for every quarter since 2013. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic uncertainties, which is hurting QLYS’ top-line performance.
Some of the cybersecurity players have also pointed out that organizations are delaying or taking more time in finalizing deals or even rightsizing deals in the current uncertain macroeconomic environment. Changes in customer spending patterns are hurting QLYS’ top-line growth.
Despite the near-term challenges, it’s not all doom and gloom for Qualys. Once the current macroeconomic headwinds subside, QLYS is well-positioned to resume its growth trajectory, driven by its strong fundamentals and promising long-term outlook.
Long-Term Prospects Remain Bright for QLYS
Qualys benefits from the growing cybersecurity space driven by a long list of data breaches. The introduction of artificial intelligence and cloud computing has given rise to a range of sophisticated cyberattacks that have created a big market for Qualys as it is growing rapidly in this space with its diversified product portfolio.
Qualys’ product portfolio ranges across cybersecurity asset management, patch management and cloud security solutions, catering to the evolving security landscape. QLYS is also benefiting from a large partner base that includes big names like Verizon, Cognizant, Fujitsu, IBM, NTT, Accenture, Infosys (INFY - Free Report) , Deutsche Telekom, Amazon Web Services, Alphabet’s (GOOGL - Free Report) Google Cloud Platform and Microsoft (MSFT - Free Report) .
Microsoft and Qualys have been partners for a long time. Recently, Qualys and Microsoft collaborated to enhance MSFT’s Security Copilot product. QLYS and Alphabet’s Google Cloud have partnered to offer customers a one-click vulnerability assessment through Qualys Agent. Infosys, on the other hand, uses Qualys Vulnerability Management, Detection and Response (VMDR) and Multi-Vector Endpoint Detection and Response system in its Cyber Next Platform.
Qualys is one of the leading providers of VMDR solutions. QLYS has been witnessing increasing VMDR customer penetration for the past several quarters, which indicates the growing adoption of its VMDR solutions. At the end of the fourth quarter of 2023, VMDR customer penetration reached 56% from 48% at the end of the fourth quarter of 2022.
QLYS Earnings Estimates Show Upward Movement
Analysts remain optimistic about QLYS' future. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 37 cents to $5.58 per share over the past 30 days, suggesting a 5.9% increase from the previous year.
Image Source: Zacks Investment Research
Valuation Multiple Indicates QLYS Stock is Cheap
Qualys’ shares currently trading at a significant discount to the industry average, making the stock more attractive on the valuation front. QLYS has a forward 12-month P/S of 7.28X, which is lower than both the Zacks Security industry’s 11.41X and QLYS’ five-year median of 9.55X.
Image Source: Zacks Investment Research
Final Thoughts
Although Qualys shares have been experiencing a declining trend due to near-term macroeconomic challenges, the stock will bounce back once these headwinds subside. QLYS has a strong product portfolio and partner base, which are likely to provide traction to the demand for its products. The stock’s attractive valuation also makes it worth investing in right now.
Image: Bigstock
Qualys Stock Plunges 36% Year to Date: Should You Buy the Dip?
Qualys (QLYS - Free Report) , a prominent player in the cybersecurity space, has plunged 36.3% year to date after reaching its all-time high in December 2023. The Zacks Security industry in which the stock belongs has declined 11.9% year to date.
After reaching all-time highs, its continuous decline raises the question: is it time to buy, hold, or sell?
Image Source: Zacks Investment Research
What Triggered Qualys' Decline?
The underperformance of Qualys’ shares can be attributable to highly volatile market conditions amid the ongoing macroeconomic uncertainties. Factors, including investors’ concerns over the Federal Reserve's interest rate policies and fears of a looming U.S. recession, have weighed on the cybersecurity stocks and that has not spared Qualys either.
Additionally, Qualys’ sluggish sales growth has made investors cautious about its near-term prospects. The company’s revenue growth rate decelerated to a single-digit percentage range in second-quarter 2024 compared with a strong double-digit percentage growth rate it has registered for every quarter since 2013. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic uncertainties, which is hurting QLYS’ top-line performance.
Some of the cybersecurity players have also pointed out that organizations are delaying or taking more time in finalizing deals or even rightsizing deals in the current uncertain macroeconomic environment. Changes in customer spending patterns are hurting QLYS’ top-line growth.
Despite the near-term challenges, it’s not all doom and gloom for Qualys. Once the current macroeconomic headwinds subside, QLYS is well-positioned to resume its growth trajectory, driven by its strong fundamentals and promising long-term outlook.
Long-Term Prospects Remain Bright for QLYS
Qualys benefits from the growing cybersecurity space driven by a long list of data breaches. The introduction of artificial intelligence and cloud computing has given rise to a range of sophisticated cyberattacks that have created a big market for Qualys as it is growing rapidly in this space with its diversified product portfolio.
Qualys’ product portfolio ranges across cybersecurity asset management, patch management and cloud security solutions, catering to the evolving security landscape. QLYS is also benefiting from a large partner base that includes big names like Verizon, Cognizant, Fujitsu, IBM, NTT, Accenture, Infosys (INFY - Free Report) , Deutsche Telekom, Amazon Web Services, Alphabet’s (GOOGL - Free Report) Google Cloud Platform and Microsoft (MSFT - Free Report) .
Microsoft and Qualys have been partners for a long time. Recently, Qualys and Microsoft collaborated to enhance MSFT’s Security Copilot product. QLYS and Alphabet’s Google Cloud have partnered to offer customers a one-click vulnerability assessment through Qualys Agent. Infosys, on the other hand, uses Qualys Vulnerability Management, Detection and Response (VMDR) and Multi-Vector Endpoint Detection and Response system in its Cyber Next Platform.
Qualys is one of the leading providers of VMDR solutions. QLYS has been witnessing increasing VMDR customer penetration for the past several quarters, which indicates the growing adoption of its VMDR solutions. At the end of the fourth quarter of 2023, VMDR customer penetration reached 56% from 48% at the end of the fourth quarter of 2022.
QLYS Earnings Estimates Show Upward Movement
Analysts remain optimistic about QLYS' future. The Zacks Consensus Estimate for 2024 earnings has been revised upward by 37 cents to $5.58 per share over the past 30 days, suggesting a 5.9% increase from the previous year.
Image Source: Zacks Investment Research
Valuation Multiple Indicates QLYS Stock is Cheap
Qualys’ shares currently trading at a significant discount to the industry average, making the stock more attractive on the valuation front. QLYS has a forward 12-month P/S of 7.28X, which is lower than both the Zacks Security industry’s 11.41X and QLYS’ five-year median of 9.55X.
Image Source: Zacks Investment Research
Final Thoughts
Although Qualys shares have been experiencing a declining trend due to near-term macroeconomic challenges, the stock will bounce back once these headwinds subside. QLYS has a strong product portfolio and partner base, which are likely to provide traction to the demand for its products. The stock’s attractive valuation also makes it worth investing in right now.
At present, Qualys sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.