Cognyte Software (CGNT) Stock Forecast & Price Target

Cognyte Software Ltd. operates in a sector characterized by increasing cybersecurity vulnerabilities, as evidenced by a 40% year-over-year rise in newly disclosed vulnerabilities with an average CVSS score of 5.7. This growing landscape of security threats positions Cognyte’s security analytics software as increasingly vital for governments and enterprises seeking effective decision-making and investigative tools. A focus on accelerating revenue growth and enhancing the mix of recurring revenue will be crucial for Cognyte to potentially achieve a favorable valuation re-rating, highlighting the stock's positive outlook based on emerging market demands.

Cognyte Software Ltd's financial performance exhibits a concerning trend, with Software Revenue declining from 88.9% in FY24 to 87.5% in FY25, and further dropping to 85.9% in 1QFY26, indicating volatility in revenue generation. The significant decrease in Recurring Revenue, which fell below 50% of Total Revenue for the first time since 2QFY24, suggests ongoing difficulties in maintaining a stable revenue mix. Although guidance projects a 12% year-over-year growth in Software Revenue for FY26, the noted decline in Recurring Revenue as a percentage of total revenue raises red flags regarding the company's ability to achieve sustainable growth.