Canaccord Genuity hits Corero Network Security with 'speculative buy' rating

Canaccord Genuity said following Corero's January update, its full-year results confirmed figures telegraphed earlier, with revenues of $20.1m implying an overall reduction of 4% year-on-year driven by a 22% decline in more volatile software licence and appliance sales.

The Canadian bank also noted that the softening macro environment had started to impact Corero in late Q3, similar to peers, with its new forecasts now assuming a return to +7% growth in 2023, supported by 13% growth in order intake and annual recurring revenues last year, roughly $2.0m in new orders in Q1 and easing comparatives in the "seasonally important" second half.

"On our new estimates, the shares trade on a CY2023E EV/sales multiple of 1.7x; this is too low, in our view, given Corero's strong DDoS protection offering, >60% recurring revenue share, and cybersecurity software peers trading on 2-3x. This is also well below industry M&A multiples with the ongoing ~£2.90/share buyout of Kape Technologies implying 2.4x EV/sales while DDoS peer Imperva was acquired by Thoma Bravo in 2018 for 6x," said Canaccord.

Reporting by Iain Gilbert at Sharecast.com