Qualys
QLYS
$158.26
+6.85%
Qualys is a cloud security and compliance solutions provider that helps businesses identify and manage their security risks and compliance requirements. The California-based company has more than 10,000 customers worldwide, the majority of which are small- and medium-size businesses, and it went public in 2012. As a pioneer in cloud-based vulnerability management, Qualys competes with legacy on-premise vendors and other cloud-native platforms. The current investor narrative centers on the company's consistent revenue growth and expanding margins, though its relatively high valuation and modest analyst coverage raise questions about upside potential in a competitive cybersecurity landscape.…
QLYS
Qualys
$158.26
Investment Opinion: Should I buy QLYS Today?
Rating: Hold. Qualys is a well-run, profitable cybersecurity company with a strong balance sheet, but its moderate growth rate and recent price surge suggest limited upside in the near term. The analyst consensus is neutral to bullish, with an average EPS estimate of $10.10 for the next fiscal year, implying a forward PE of 14.7x at the current price, which offers some upside if earnings materialize.
Supporting Evidence: The trailing PE of 24.21x is below the software industry average of 30x, and the forward PE of 17.91x implies expected earnings growth. Revenue grew 10.11% YoY, and net margin improved to 30.32%. Free cash flow of $304.41 million provides financial flexibility. The PEG ratio of 1.48 suggests the stock is fairly valued relative to its growth rate. However, the stock has already rallied 67% in three months, reducing the margin of safety.
Risks & Conditions: The biggest risks are a deceleration in revenue growth below 10% or a compression in valuation multiples. If the forward PE falls below 15x (implying a price below $151.50), the stock would become more attractive. Conversely, if growth accelerates above 15%, the rating could be upgraded to Buy. Overall, Qualys appears fairly valued relative to its history and peers, with limited upside from current levels.
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QLYS 12-Month Price Forecast
Qualys is a solid company with strong fundamentals, but the recent price surge has reduced the margin of safety. The base case of steady growth and stable valuation is most likely, with a 50% probability. The bull case requires an acceleration in growth, which is possible but not guaranteed. The bear case could materialize if growth disappoints or multiples contract. Overall, the risk/reward is balanced, favoring a neutral stance. An upgrade to bullish would require evidence of accelerating growth or a pullback to lower valuations.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Qualys's 12-month outlook, with a consensus price target around $205.74 and implied upside of +30.0% versus the current price.
Average Target
$205.74
4 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
4
covering this stock
Price Range
$127 - $206
Analyst target range
Qualys has coverage from 4 analysts, with a consensus recommendation leaning neutral to bullish. The average estimated EPS for the next fiscal year is $10.10, with a range of $10.01 to $10.21. The average estimated revenue is $950 million, implying a forward PS ratio of about 5.1x based on the current market cap of $4.8 billion. Analyst targets are not explicitly provided, but the EPS estimates suggest a forward PE of 14.7x at the current price, indicating potential upside if earnings materialize. The low number of analysts (4) suggests limited coverage, which is typical for mid-cap stocks. The spread between low and high EPS estimates is narrow ($10.01 to $10.21), indicating relatively high conviction among analysts. However, the lack of explicit price targets and ratings distribution limits the depth of sentiment analysis. The recent institutional ratings show a mix of Hold, Sector Perform, Outperform, and Underweight, with no recent upgrades or downgrades, reflecting a balanced view.
Bulls vs Bears: QLYS Investment Factors
Qualys presents a mixed picture: strong profitability, healthy margins, and a low debt burden are bullish, while moderate growth and limited analyst coverage temper enthusiasm. The bull case is supported by a trailing PE near historical lows and robust free cash flow, but the bear case highlights the recent rapid price appreciation and modest revenue growth. The key tension is whether the company can accelerate growth to justify its current valuation, or if the recent rally has already priced in future improvements. Currently, the evidence slightly favors the bull case given the attractive valuation relative to history and strong fundamentals.
Bullish
- Strong profitability and margins: Qualys reported a net margin of 30.32% in Q4 2025, with operating margin improving to 33.57% from 31.04% a year ago. Gross margin remains high at 83.36%, indicating strong pricing power and cost control.
- Low valuation relative to history: The trailing PE of 24.21x is near the lower end of its 5-year range of 22x-61x, suggesting the stock is relatively cheap compared to its own history. The forward PE of 17.91x implies expected earnings growth of about 35%.
- Healthy balance sheet and cash flow: Debt-to-equity is only 0.17, and free cash flow for the trailing twelve months was $304.41 million, providing ample liquidity for growth and share repurchases. Current ratio of 1.41 indicates adequate short-term liquidity.
- Consistent revenue growth: Revenue grew 10.11% year-over-year in Q4 2025 to $175.28 million, with sequential growth from $145.81 million in Q1 2024. The company has demonstrated steady top-line expansion.
Bearish
- Moderate growth rate: Revenue growth of 10.11% YoY is solid but not exceptional for a tech company. The PEG ratio of 1.48 suggests the stock is reasonably priced relative to growth, but higher-growth peers may offer more upside.
- Limited analyst coverage: Only 4 analysts cover Qualys, which is low for a mid-cap stock. This limited coverage can lead to less efficient pricing and higher information risk for investors.
- Recent price surge may be overextended: The stock has surged 67.63% in the last three months and 30.59% in the last month, now trading at 95.3% of its 52-week high. This rapid appreciation may indicate overextension and potential for a pullback.
- Low beta may not reflect recent volatility: Beta of 0.605 suggests lower volatility than the market, but the recent 67% three-month gain contradicts this. The stock may be riskier than its beta implies.
QLYS Technical Analysis
Qualys is in a strong recovery uptrend after a significant drawdown. Over the past year, the stock has gained 2.88%, but it has surged 67.63% in the last three months and 30.59% in the last month, indicating accelerating momentum. The current price of $148.12 is near the top of its 52-week range of $74.51 to $155.47, trading at 95.3% of the high, suggesting bullish momentum but also potential overextension. Short-term momentum is clearly diverging from the tepid 1-year performance, as the 1-month change of +30.59% far outpaces the 1-year change of +2.88%, signaling a potential trend reversal or mean reversion from earlier lows. The RSI is not provided, but the rapid price appreciation implies strong buying pressure. The stock's beta of 0.605 indicates it is less volatile than the market, which is unusual given the recent sharp moves. Key support lies near the 52-week low of $74.51, while resistance is at the 52-week high of $155.47. A breakout above $155.47 would signal a new uptrend, while a breakdown below $74.51 would negate the recovery. The low beta suggests that the stock's volatility is relatively muted compared to the broader market, which may appeal to risk-averse investors.
Beta
0.60
0.60x market volatility
Max Drawdown
-50.5%
Largest decline past year
52-Week Range
$75-$159
Price range past year
Annual Return
+5.5%
Cumulative gain past year
| Period | QLYS Return | S&P 500 |
|---|---|---|
| 1m | +44.0% | +1.9% |
| 3m | +79.4% | +14.0% |
| 6m | +20.0% | +8.9% |
| 1y | +5.5% | +20.1% |
| ytd | +20.8% | +10.2% |
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QLYS Fundamental Analysis
Qualys has demonstrated steady revenue growth, with the most recent quarterly revenue of $175.28 million in Q4 2025, up 10.11% year-over-year from $159.19 million in Q4 2024. Revenue has grown sequentially from $145.81 million in Q1 2024 to $175.28 million in Q4 2025, indicating a consistent upward trajectory. The company's net income for Q4 2025 was $53.15 million, with a net margin of 30.32%, reflecting strong profitability. Gross margin remains high at 83.36% in Q4 2025, slightly up from 81.76% in Q4 2024, indicating stable pricing power and cost control. Operating margin improved to 33.57% from 31.04% a year ago, showing operating leverage. The company is solidly profitable with a trailing PE of 24.21 and a forward PE of 17.91, suggesting earnings growth is expected. Qualys has a healthy balance sheet with a debt-to-equity ratio of 0.17, indicating low leverage. Free cash flow for the trailing twelve months was $304.41 million, providing ample liquidity for internal growth and share repurchases. The current ratio of 1.41 suggests adequate short-term liquidity, and the ROE of 35.34% highlights efficient capital utilization.
Quarterly Revenue
$175282000.0B
2025-12
Revenue YoY Growth
+0.10%
YoY Comparison
Gross Margin
+0.83%
Latest Quarter
Free Cash Flow
$304410000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is QLYS Overvalued?
Since net income is positive, the primary valuation metric is the PE ratio. The trailing PE is 24.21x, while the forward PE is 17.91x, implying the market expects earnings growth of about 35% over the next year. The PEG ratio of 1.48 suggests the stock is reasonably priced relative to its growth rate. Compared to the software industry average PE of approximately 30x, Qualys trades at a 19% discount, which may be justified by its moderate growth rate. The PS ratio of 7.18x is below the industry average of around 10x, further indicating a discount. Historically, Qualys's trailing PE has ranged from 22x to 61x over the past five years. The current 24.21x is near the lower end of that range, suggesting the stock is relatively cheap compared to its own history. This could indicate a value opportunity if growth accelerates, or it may reflect skepticism about future prospects.
PE
24.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 22x~4505x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
17.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Qualys has low financial risk with a debt-to-equity ratio of 0.17 and strong free cash flow of $304.41 million. However, revenue growth of 10.11% YoY is moderate, and any deceleration could pressure the stock. The net margin of 30.32% is high, but operating expenses are rising (SGA up 11% YoY in Q4 2025), which could compress margins if revenue growth slows. The company's reliance on subscription revenue provides recurring income, but customer concentration among SMBs may increase churn risk during economic downturns.
Market & Competitive Risks: Qualys trades at a trailing PE of 24.21x, a discount to the software industry average of ~30x, but the low beta of 0.605 suggests the market views it as less risky. However, the cybersecurity space is highly competitive, with larger players like CrowdStrike and Palo Alto Networks investing heavily. Regulatory changes or data breach incidents could impact demand. The stock's recent 67% rally in three months may have priced in positive news, leaving little room for error. With only 4 analysts covering the stock, there is a risk of negative surprises if earnings miss expectations.
Worst-Case Scenario: In a severe downturn, Qualys could see its PE contract to 15x (near historical lows), implying a price of $90.90 based on forward EPS of $10.10. This represents a 38.6% decline from the current price of $148.12. The 52-week low of $74.51 would imply a 49.7% drop. A worst-case scenario could involve a prolonged slowdown in IT spending, increased competition, or a major security incident eroding customer trust. Given the stock's low beta, such a decline would likely require a broad market correction or company-specific disappointment.
FAQ
The key risks include: 1) Moderate growth risk: Revenue growth of 10.11% YoY could decelerate due to competition or macro headwinds. 2) Valuation risk: The stock has rallied 67% in three months, and any disappointment could lead to multiple compression. 3) Limited coverage: Only 4 analysts cover the stock, increasing information risk. 4) Competitive risk: Larger cybersecurity players may erode market share. The most severe risk is a growth slowdown causing the PE to contract to 15x, implying a 38% downside from current levels.
The 12-month forecast is balanced, with a base case probability of 50% for a price range of $140-$165, assuming steady 10% revenue growth and stable multiples. The bull case (25% probability) targets $170-$190 if growth accelerates, while the bear case (25% probability) sees $90-$110 if growth disappoints. The most likely scenario is the base case, with the stock trading in line with its historical PE range. Key assumptions include sustained gross margins above 82% and operating margins around 33%.
Qualys appears fairly valued to slightly undervalued based on its trailing PE of 24.21x, which is below the software industry average of 30x and near the low end of its 5-year range of 22x-61x. The forward PE of 17.91x implies expected earnings growth of about 35%, which is reasonable given the PEG ratio of 1.48. The PS ratio of 7.18x is also below the industry average of 10x. Overall, the market is pricing in moderate growth expectations, and the stock does not appear overvalued relative to its history or peers.
Qualys is a good stock for investors seeking a profitable cybersecurity company with a strong balance sheet and reasonable valuation. The trailing PE of 24.21x is below the software industry average and near the low end of its historical range, suggesting value. However, the stock has rallied 67% in three months, reducing near-term upside. Analyst estimates imply a forward PE of 14.7x, offering potential if earnings materialize. The biggest downside risk is a deceleration in revenue growth below 10%. For long-term investors, it could be a solid holding, but short-term traders may find better opportunities elsewhere.
Qualys is more suitable for long-term investment due to its steady growth, strong profitability, and low beta of 0.605, which suggests lower volatility. The company's recurring subscription revenue and healthy free cash flow provide stability. Short-term traders may find the recent 67% rally concerning, as the stock is near its 52-week high and could be overextended. A minimum holding period of 12-18 months is recommended to allow the growth story to play out and to avoid short-term volatility.