Proofpoint (PFPT) has fallen 13.3% since the start of May 2019. The stock had gained an impressive 50.0% in the first four months of 2019. There was no identifiable news that drove PFPT’s stock lower. It looks like broader market weakness and an uncertain macro environment coupled with profit booking sent the stock lower last month.
Proof Point stock is trading at $108.79, which is 17.0% below its 52-week high. PFPT stock has generated impressive returns for investors over the years. The stock has risen over 26.4% annually in the last five years. In comparison, its sales have risen 39.0%, while earnings have risen by a whopping 73% annually in the last five years.
Is the stock undervalued?
Does the recent pullback provide investors with a buying opportunity? PFPT stock is trading at a forward PE multiple of 54.1x. In comparison, its earnings are estimated to be flat this year and gain 37.0% in 2020.
Its earnings are also expected to rise at a CAGR (compound annual growth rate) of 25.0% over the next five years, while analysts estimate sales to rise by 20.5% annually in the next three years. Proofpoint stock looks expensive, but its higher valuation is supported by a robust growth rate.
However, the stock might lose considerable value if broader markets remain weak. PFPT stock though is a solid long-term pick.
How does Wall Street view Proofpoint?
Out of the 30 analysts tracking Proofpoint, 26 recommend a “buy,” three recommend a “hold,” and one recommends a “sell.” The analysts have an average target price of $138.12, which indicates that the stock has an upside potential of 27.0% from current levels.