Cellebrite DI: A Strong Buy on Projected Growth and Platform Evolution

Bank of America Securities analyst Tomer Zilberman has reiterated their bullish stance on CLBT stock, giving a Buy rating on March 28.

Tomer Zilberman has given his Buy rating due to a combination of factors that point towards a promising future for Cellebrite DI. During the recent Investor Day, Cellebrite’s management outlined long-term growth targets that are underpinned by a strong market demand and an acceleration in new product initiatives. Zilberman’s optimism is further bolstered by Cellebrite’s evolution from a provider of best-of-breed point solutions for mobile extraction to a comprehensive end-to-end platform. This transition aligns well with the company’s unified platform strategy, which is expected to contribute to sustainable growth, justifying an increase in the price objective from $12 to $13. The valuation is now pegged at approximately 5.5 times the forecasted CY25E EV/Sales, up from the previous 5 times.

The foundation for Cellebrite’s long-term growth appears robust, with management projecting an impressive 24% compound annual growth rate (CAGR) in annual recurring revenue (ARR) over five years, potentially nearing $1 billion by 2028. Notably, this projection anticipates an acceleration in ARR growth between 2024 and 2026. While the revenue growth guidance is slightly lower than the ARR’s due to the shift towards SaaS and Cloud offerings, which moderates revenue recognition, the company’s gross margin is expected to hold strong at 83% over the next five years. Moreover, management’s focus on operational efficiencies is anticipated to drive improvements in operating margins, supporting a long-term target for an adjusted EBITDA margin of around 22.5%. The expansion of the total addressable market (TAM), driven by new capabilities and increasing spend per agency, further underscores Cellebrite’s growth potential.

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Cellebrite DI (CLBT) Company Description:

Cellebrite offers digital intelligence solutions. Its platform and solutions help law enforcement agencies (police departments, armed services, public defenders, start departments) and enterprise customers to better collect, review, analyze, and manage digital data in legally sanctioned investigations.