Darktrace has extreme growth potential, says Berenberg

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Darktrace PLC (LON:DARK) has “extreme” capacity for expansion over the next year amid a rampant rise in cybercrime, according to analysts at Berenberg.


In a note on Friday, the broker upped their target price for the cybersecurity group to 525p from 450p and retained their ‘buy’ rating, saying that despite having the second-best initial public offering (IPO) in Europe, the company’s valuation “does not look right” when compared to its peers, which it said have seen “significant revisions to their 2021 revenue guidance”.


READ: Darktrace shares climb as unconditional trading begins on the LSE


As a result of the upsurge in cybercrime, analysts added that a predicted slowdown in growth for Darktrace is “looking increasingly unlikely given market readacross” and that the mid-term outlook is “only improving”.


The broker also said the cyber industry is “competitive and the strengths of ones technology is key almost above all else” and that the firm had “seen a raft of positive news on this front” in recent weeks, having won the “outstanding security automation” award at the 2021 Computing Excellence Awards.


“The capacity for significant multiple expansion [at Darktrace] over the next year is perhaps the most extreme among our [technology, media, and telecom sector] coverage of c44 stocks. With peers on average upgrading their sales guidance by more than 10%, Darktrace’s next set of results could be the catalyst to make the valuation gap close”, Berenberg added.


Shares in Darktrace were up 3.9% at 484.6p in early afternoon trading.

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