Darktrace Soars as Outlook Raise Prompts Upgrade from Peel Hunt

(Bloomberg) -- Darktrace Plc soared the most since its trading debut after the cybersecurity company boosted its outlook, prompting an upgrade from the broker whose bearish note triggered a plunge in the stock last year.

The shares jumped as much as 25%, the most since the day they listed in April, after the Cambridge, England-based firm said it expects full-year revenue growth of between 42% and 44%, up from a prior view of 37% to 39%. Recent performance has benefited from new customer acquisitions and improvements in churn and retention, the software company added. 

The rally leaves Darktrace shares up about 86% from their initial public offering price. However, they remain more than 50% below a record high reached in September. The stock slumped in October after Peel Hunt analysts suggested the firm’s artificial intelligence-based product may be a “gimmick.” They were also weighed on by the end of a lockup period that allowed early investors to sell shares.

READ: Darktrace to Leave FTSE 100 After Brief Stint as Shares Slump

“Given the share price has now approached our target price, we pause for breath and move from sell to hold,” Peel analysts including Oyvind Bjerke wrote Tuesday, reiterating their target of 473 pence.

“We note, however, that churn rates will appear lower during periods of higher growth due to customer contract lock-in dynamics,” they said.

The shares were up 18% at 464.40 pence as of 9:59 a.m. in London.

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