DA Davidson has adjusted its price target on CommVault Systems (NASDAQ: CVLT) downward to $185 from a previous $220, while retaining a Buy recommendation for the data management software company. Currently, CommVault shares are priced at $120.22, down approximately 40% from their peak of $200.68 over the past year. The decline includes a steep 28.36% drop in the last six months.
The target price reduction coincides with a widespread selloff in the software sector, which has resulted in compressed valuation multiples among peer companies. Despite the revised target, DA Davidson views the share price retreat as a favorable entry point. This perspective aligns with the broader analyst consensus, which remains optimistic, reflected by a 1.38 consensus recommendation rating and price targets spanning from $144 to $205.
Looking ahead, DA Davidson anticipates that CommVault's fiscal third-quarter 2026 results, due on Tuesday, January 27, will be robust. The firm expects that term-license duration metrics will conform to management guidance. Both Annual Recurring Revenue (ARR) and Earnings Before Interest and Taxes (EBIT) margins are projected to potentially surpass expectations for the quarter and the revised fiscal year 2026 outlook. CommVault has exhibited notable revenue growth of 22.02% over the past twelve months, supported by strong gross profit margins measured at 81.55%.
The research group believes that the forthcoming quarterly results will help ease investor concerns surrounding the potential compression of term-license durations, which could otherwise lead to downside revisions in profit-and-loss forecasts due to reduced upfront revenue recognition. According to DA Davidson's analysis, shares of CommVault currently trade at about a 30% discount compared to similar growth peers.
Additional analyst commentary reveals a range of expectations ahead of the earnings announcement. Guggenheim projects that CommVault will exceed its baseline constant currency Total Net New Annual Recurring Revenue (NNARR) of approximately $45 million per quarter, surpassing the consensus estimate of $39 million. Cantor Fitzgerald foresees results largely in line with expectations, noting continued Software as a Service (SaaS) growth but subdued Term License expansion attributable to duration factors.
Regarding analyst recommendations, Truist Securities recently lowered their price target to $175 while keeping a Buy rating. Piper Sandler maintains a favorable Overweight rating with a $155 price target. Meanwhile, Cantor Fitzgerald reiterates a Neutral stance with a $144 price target.
In product developments, CommVault has introduced its Cloud Unified Data Vault service, aimed at enhancing protection for S3-based data. This solution intends to simplify data protection processes without requiring additional agents or systems, underscoring the company's focus on cloud data security and efficiency.