Cyren Ltd. (CYRN) in McLean, Va., provides leading email providers, cybersecurity vendors, service providers, and organizations with rapid time-to-protection through threat detection services, threat intelligence, and enterprise email security products. Its clients include industry leaders, such as Microsoft Corporation (MSFT) and Alphabet Inc.’s (GOOGL) Google. Last week its shares gained nearly 22% in price after it announced it had achieved compliance with NASDAQ listing requirements.

However, the stock has declined 51.1% in price over the past nine months and 25.5% over the past three months to close its Friday trading session at $5.93. And the company recently concluded a private offering of approximately $12 million ordinary shares. This could result in share dilution and negatively affect existing shareholders’ earnings per share.

In addition, the stock is trading 71.8% below its 52-week high of $21, which it hit on March 03, 2021.

Click here to checkout our Cybersecurity Industry Report for 2022

Here’s what could shape CYRN’s performance in the near term:

Additional Financing

This month, CYRN announced the completion of a private placement with certain institutional and other accredited investors to raise approximately $12 million from the issuance of 3,129,075 ordinary shares at $3.835 per share. The company aims to use the net proceeds of the private placement for working capital and other company purposes.

Underwhelming Financials

CYRN’s revenue declined 18.1% year-over-year to $7.46 million for the third quarter, ended Sept. 30, 2021. Its non-GAAP operating loss grew 50.7% from the prior-year quarter to $3.98 million. The company’s non-GAAP net loss surged 49.6% from its year-ago value to $4.33 million, while its non-GAAP loss per share amounted to $0.06. In addition, its net cash used in operating activities increased 35.5% year-over-year to $4.87 million.

Poor Profitability

CYRN’s 0.50% trailing-12-months asset turnover ratio is 22.8% lower than the 0.64% industry average. Also, its ROA, ROC, and net income margin are negative 31.4%, 24.8%, and 63.8%, respectively. And its trailing-12-month cash from operations stood at negative $15.42 million compared to the $96.77 million industry average.

POWR Ratings Reflect Uncertainty

CYRN has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. CYRN has a D grade for Growth which is justified given the company’s weak financials and poor profitability.

Of the 29 stocks in the D-rated Software – Security industry, CYRN is ranked #18.

Beyond what I’ve stated above, you can view CYRN ratings for Value, Quality, Stability, Sentiment, and Momentum here.

Bottom Line

With more than 1.3 billion users, CYRN has a huge customer base. Furthermore, with the assistance of CIS, it has made significant advancements over the past year. However, considering the company recently closed private shares placements, there are concerns over its cash flow generating capabilities. In addition, analysts expect its revenue to decline to 12.4% in its fiscal year 2021. So, given the company’s weak profitability and current financial instability, we think the stock is best avoided now.

How Does Cyren Ltd. (CYRN) Stack Up Against its Peers?

While CYRN has an overall D rating, one might want to consider its industry peers, Trend Micro Incorporated (TMICY), Qualys Inc. (QLYS), and Radware Ltd. (RDWR), which have an overall B (Buy) rating.

Click here to checkout our Cybersecurity Industry Report for 2022

CYRN shares fell $0.71 (-11.97%) in premarket trading Monday. Year-to-date, CYRN has declined -8.80%, versus a -9.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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