William Blair upgrades Cellebrite stock to outperform on new platform launch

© Shlomi Yosef, Cellebrite PR

On Wednesday, Cellebrite (NASDAQ:CLBT) received an upgrade from William Blair, shifting from Market Perform to Outperform. The firm anticipates that the company’s upcoming analyst day on March 27 will be a pivotal moment, as Cellebrite is expected to present its newly launched Case-to-Closure (C2C) solution.

This platform, which debuted in January, integrates several of Cellebrite’s applications, including UFED, Physical Analyzer, Guardian, and Pathfinder, into a cohesive system.

The new C2C offering addresses what was previously seen as a fragmented set of tools by providing a unified platform that is likely to drive broader adoption, especially of Pathfinder. Pathfinder is an investigative analytics solution that complements Cellebrite’s flagship smartphone intelligence software and is seen as a significant expansion of the company’s addressable market—from $3 billion to over $8 billion.

The firm’s positive outlook is also based on the belief that the current stock price does not fully account for the company’s consistent performance, including recent financial overachievements, nor does it reflect the ongoing strength in budget allocations reported by Cellebrite’s peers. Furthermore, the recent activities in government software mergers and acquisitions, as well as investments in companies like OpenGov and RapidSoS, suggest that Cellebrite may also become an M&A target.

The presence of new Chairman Thomas Hogan, who has been on the road with the firm since last year, is considered a valuable asset for the successful rollout of C2C. His insights and strategic guidance are expected to contribute positively to the product’s reception in the market.

Cellebrite’s shares are currently trading at a multiple of 26 times its projected 2025 EBITDA, taking into account full warrant dilution. This is in contrast to Axon’s (NASDAQ:AXON) multiple of 36 and the 32-times multiple from the Thoma Bravo–Magnet Forensics deal.

The expectation is that Cellebrite’s discount to these multiples will narrow, particularly after the analyst day, which could increase confidence in C2C’s potential. William Blair forecasts a 24% to 31% upside for Cellebrite’s stock over the next 12 months, based on a 2026 EBITDA multiple of 28 to 30 times.

InvestingPro Insights

As Cellebrite (NASDAQ:CLBT) prepares for its pivotal analyst day, the company’s financial health and market performance are key factors for investors to consider. With a robust gross profit margin of 83.63% in the last twelve months as of Q1 2023, Cellebrite demonstrates its ability to maintain profitability in its operations. This impressive margin, coupled with a revenue growth of 25.66% in Q1 2023, indicates a strong underlying business model that is scaling effectively.

InvestingPro Tips reveal that Cellebrite holds more cash than debt on its balance sheet, suggesting a solid financial position that could support future growth initiatives or weather economic downturns. Moreover, analysts have revised their earnings upwards for the upcoming period, reflecting optimism about the company’s financial prospects. These insights underscore the potential for Cellebrite’s stock to realize the upside forecasted by William Blair.

Despite a challenging valuation landscape, with a high Price / Book multiple of 66.4 as of the last twelve months in Q1 2023, Cellebrite has shown a strong return over the last year, with an impressive 97.77% price total return. This performance may attract investors looking for growth opportunities, particularly as the company aims to expand its market reach with the new C2C solution.

For those interested in a deeper analysis, there are an additional 14 InvestingPro Tips available for Cellebrite, which can be accessed through the InvestingPro platform. To take advantage of these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a comprehensive toolset for informed investment decisions.

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