Is CyberArk Software (CYBR) a Buy After Strong Growth and a Pending Merger with Palo Alto Networks?

The cybersecurity sector has long been a magnet for high-growth speculation, but few stories in 2025 have captured investor attention like CyberArk Software (CYBR). With a share price of $475.67 as of November 19, 2025, and a pending $25 billion acquisition by Palo Alto Networks, the company's valuation has become a focal point for debates about realism and sustainability. To assess whether CYBR remains a compelling buy, investors must dissect its financials, compare them to sector averages, and evaluate the strategic logic of its impending merger.

Valuation Realism: A Tale of Two Markets

CyberArk's current valuation appears anchored to its $1.30 billion trailing twelve-month (TTM) revenue, yielding a price-to-sales (P/S) ratio of approximately 19.2x (based on a $25 billion acquisition price). This multiple far exceeds the average for public cybersecurity companies, which trade at 7.8x revenue according to Finrofca data, but aligns with private M&A benchmarks, where deals command an average of 16.3x revenue as reported by Finrofca. The disparity reflects a key dynamic: public markets remain cautious about unprofitable growth stocks, while private acquirers are willing to pay a premium for strategic assets.

CyberArk's unprofitability-TTM net losses of $227 million-further complicates its valuation. While identity and access management (IAM) startups in the private market have fetched multiples as high as 25.3x revenue according to Finrofca data, CyberArk's public P/S ratio suggests investors are paying for future potential rather than current earnings. This premium is partly justified by the company's niche in privileged access management (PAM), a critical layer of enterprise security. However, the pending merger with Palo Alto Networks introduces a new lens: the $25 billion acquisition price implies a 19.2x revenue multiple, which is aggressive but not unprecedented in a sector where megadeals like Alphabet's $32 billion acquisition of Wiz have normalized high-risk, high-reward bets according to Ropes Gray analysis.

Growth Sustainability: Sector Trends and Strategic Fit

The cybersecurity sector is projected to grow at a 14.4% compound annual growth rate (CAGR) through 2032 according to Fortune Business Insights, driven by cloud adoption and escalating cyber threats. CyberArk's focus on IAM/PAM positions it to benefit from this trend, as enterprises increasingly prioritize identity-centric security. Palo Alto Networks' CEO Nikesh Arora has emphasized that CyberArk's capabilities are "the best in the industry" for addressing risks tied to privileged access according to SDX Central reporting, a claim that underscores the strategic rationale for the merger.

The acquisition also aligns with broader industry consolidation. M&A activity in 2025 is expected to exceed 2024 levels by 10% according to Ropes Gray analysis, with larger firms acquiring niche players to fill gaps in their portfolios. Palo Alto's $3.35 billion purchase of observability platform Chronosphere in 2025 according to The Outpost reporting illustrates this trend, as the company seeks to build an end-to-end security ecosystem. By integrating CyberArk's IAM/PAM solutions, Palo Alto aims to create a unified platform that addresses both network and identity-based threats-a move that could enhance cross-selling opportunities and customer retention.

Merger Implications: Shareholder Value and Execution Risks

The terms of the CyberArk deal-$45.00 in cash plus 2.2005 shares of Palo Alto stock per CyberArk share according to Investing.com reporting-offer shareholders a mix of immediate liquidity and upside potential. With 99.8% shareholder approval according to Investing.com reporting, the merger appears to be a win for CYBR investors, who will gain exposure to Palo Alto's broader security infrastructure. However, execution risks remain. Post-merger integration challenges, regulatory hurdles, and the need to justify the 19.2x revenue multiple through revenue synergies will test Palo Alto's management.

Risks and the Bottom Line

While CyberArk's valuation is justified by its strategic value and sector tailwinds, investors should remain cautious. The company's current unprofitability and the high cost of the acquisition raise questions about whether the combined entity can deliver returns that match the premium paid. Additionally, competition in the IAM space is intensifying, with rivals like Okta and Microsoft expanding their offerings.

That said, the cybersecurity sector's long-term growth trajectory and Palo Alto's aggressive M&A strategy suggest that the merger is a calculated bet on the future of enterprise security. For investors who believe in the sector's resilience and the strategic logic of combining IAM with broader security platforms, CyberArk remains a compelling, albeit high-risk, buy.