The average rating presented in the last row of the table above is from 1 to 5, where 1 would be a consensus Strong Buy and 5 would be a consensus Strong Sell. In the middle, 3 would be a Hold. So anything below 3 leans toward Buy as the average analyst sentiment. The average rating of 1.44 for CYBR leans strongly towards the bullish end of the spectrum, yet the CYBR price target paints a different picture. Clearly, there is something more to the story here that is worth investigating for investors looking at CyberArk Software Ltd. Of course, the average price target is just that — a mathematical average, and is only one metric. There are analysts with higher targets than the average, including one looking for a price of $140.00. And then on the other side of the spectrum one analyst has a target as low as $74.00. The standard deviation is $19.141.
But the whole reason to look at the average in the first place is to tap into a "wisdom of crowds" effort, putting together the contributions of all the individual minds who contributed to the ultimate number, as opposed to what just one particular expert believes — much like with guessing the number of jelly beans in a jar, where the average guess tends to be very close. And so with CYBR trading so far above that average target price of $111.60/share, the -7.78% downside to that average target does seem to be a paradox against the bullish analyst ratings. Might analysts be behind the curve with their targets and upward adjustments are forthcoming? Or, is it time for some of these analysts to turn bearish and downgrade on valuation? One thing is for sure: this apparent paradox makes for a good "signal" to investors in CYBR to spend fresh time assessing the company and deciding whether analysts have it right with their sentiment, or have it right with their price target for CyberArk Software Ltd. This article used data provided by Zacks Investment Research via Quandl.com. Get the latest Zacks research report on CYBR — FREE.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.