Cognyte Software (CGNT) Stock Forecast & Price Target

Cognyte Software Ltd is well-positioned in the security analytics sector, as evidenced by a significant year-over-year increase in the disclosure of vulnerabilities, rising by 40% and indicating a growing market demand for security solutions. The company's focus on enhancing its recurring revenue mix suggests a strategic emphasis on sustainable revenue growth, which is crucial for its valuation re-rating. Additionally, if Cognyte can successfully accelerate its revenue growth beyond current forecasts, the company is likely to experience positive market performance.

Cognyte Software Ltd has experienced a decline in its Software Revenue percentage, dropping from 88.9% in FY24 to 87.5% in FY25, and further falling to 85.9% in the first quarter of FY26. The company's Recurring Revenue also decreased sequentially for the first time since 2Q24, dipping below 50% of Total Revenue to 48%, indicating a troubling trend of declining Revenue mix. Despite guidance projecting a 12% year-on-year increase in Software Revenue for FY26, the inconsistent revenue mix and the steady decline in Recurring Revenue as a percentage of Total Revenue since 1Q25 suggest underlying challenges that could impact future performance negatively.