Summary
Truist Securities lowered its price target on CommVault Systems (CVLT) to $155.00 from $175.00 on Wednesday, while retaining a Buy rating after the company posted mixed results for its third quarter of fiscal 2026. The vendor reported stronger-than-expected revenue and margin metrics but missed on Net New Annualized Recurring Revenue (NNARR), which registered at $39 million versus implied guidance of $40-45 million. Shares have slid sharply over the last week and are trading close to their 52-week low.
Q3 performance and market reaction
CommVault, a provider of data storage and information management software, reported revenue and margins that topped consensus expectations. Management highlighted gross profit margins of 81.44% and reported revenue growth of 21.52% over the trailing twelve months. Despite those strengths, the company posted NNARR of $39 million, missing the implied guidance range of $40-45 million.
The market reaction has been pronounced: the stock declined 25.44% over the past week and was trading at $89.13, a level just above its 52-week low of $84.44. Analysis from InvestingPro cited in company coverage indicates CommVault appears undervalued at current prices.
Analyst commentary and drivers of the shortfall
Truist attributed the NNARR shortfall chiefly to a higher proportion of Software-as-a-Service (SaaS) bookings in the quarter, longer durations on some term license agreements and an uptick in migrations. Those items, the firm said, affected the timing and composition of recurring revenue additions even as other metrics held up.
Operationally, CommVault reported a record quarter for net new term license logos and achieved its second-highest quarter for acquiring SaaS customers. Management has nudged up its guidance for overall revenue and for operating margins while trimming its Annual Recurring Revenue (ARR) outlook slightly to 18% year-over-year growth, down from a prior 18-19% range.
Additional analyst moves and financials
CommVault’s Q3 fiscal 2026 financials also exceeded forecasts: diluted earnings per share rose 19.39% to $1.17 versus an expected $0.98, and revenue came in at $314 million compared with the $299.05 million consensus. In response to the $39 million total net new ARR figure, Mizuho reduced its price target for the company to $140.00 from $180.00 but kept an Outperform rating.
The juxtaposition of stronger-than-expected EPS and revenue against the ARR shortfall has produced a mixed market reaction, with positive operational and profitability indicators tempered by concerns over recurring revenue momentum.
Key context
- Company: CommVault Systems (CVLT) - data storage and information management software.
- Analyst moves: Truist cut price target to $155 from $175 and kept Buy; Mizuho cut its target to $140 and kept Outperform.
- Financial highlights: EPS $1.17 vs. $0.98 expected; revenue $314M vs. $299.05M expected; NNARR $39M vs. guidance $40-45M.