Qualys
QLYS
$181.98
-0.13%
Qualys, Inc. is a cloud-based security and compliance solutions provider, offering a unified platform for vulnerability management, policy compliance, and web application scanning to over 10,000 customers, primarily small and medium-sized businesses. As a pioneer in the cloud security space, Qualys differentiates itself through its integrated platform that consolidates multiple security functions, positioning it as a niche leader in the cybersecurity infrastructure sector. The current investor narrative centers on the company's accelerating growth and margin expansion, driven by increased demand for cloud security and the successful adoption of its newer solutions like TotalCloud and CyberSecurity Asset Management. Recent stock momentum reflects optimism about Qualys's ability to capitalize on the expanding cybersecurity market, though debates persist regarding valuation sustainability and competitive pressures from larger peers.…
QLYS
Qualys
$181.98
Investment Opinion: Should I buy QLYS Today?
Based on the analysis, I rate QLYS as a 'Hold'. The company has strong fundamentals with high margins and steady growth, but the current price is above the average analyst target of $171.74, implying limited upside. The consensus recommendation is 'Hold' with a mean rating of 2.68, reflecting cautious optimism. The thesis is that while the company is well-positioned in the cybersecurity niche, the valuation is fair to slightly rich, and near-term catalysts are limited.
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QLYS 12-Month Price Forecast
The AI assessment is neutral, reflecting a balanced risk-reward profile. The company has solid fundamentals, but the growth rate does not justify a premium valuation. The stock is trading near its 52-week high, and the analyst target suggests limited upside. Key developments to watch include whether revenue growth accelerates or decelerates, and how the company navigates competitive pressures. An upgrade to bullish would occur if growth exceeds 15% and the stock pulls back to a more attractive valuation, while a downgrade to bearish would occur if growth falls below 5% or if the stock price drops below $150.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Qualys's 12-month outlook, with a consensus price target around $171.74 and implied upside of -5.6% versus the current price.
Average Target
$171.74
0 analysts
Implied Upside
-5.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$95 - $220
Analyst target range
Analyst coverage is substantial with 18 analysts, and the consensus recommendation is 'Hold' with a mean rating of 2.68 (where 1 is Strong Buy and 5 is Sell). The average price target is $171.74, which is 5.6% below the current price of $181.98, indicating that analysts see limited upside or potential downside. The distribution includes 5 Buy, 8 Hold, and 5 Sell ratings, reflecting a cautious sentiment. The target range spans from $95.35 to $220.00, with the low target implying a 47.6% downside, while the high target suggests a 20.9% upside. Recent ratings actions show a mix: TD Cowen maintained Hold, Scotiabank upgraded to Sector Outperform, and JP Morgan upgraded from Underweight to Neutral, while William Blair downgraded from Outperform to Market Perform. This wide target spread and mixed sentiment highlight uncertainty about Qualys's growth sustainability and valuation.
Bulls vs Bears: QLYS Investment Factors
Qualys presents a mixed picture: strong fundamentals with high margins, steady growth, and a reasonable valuation relative to its own history, but analyst sentiment is cautious with a consensus 'Hold' and an average target below the current price. The bull case rests on the company's ability to sustain growth and expand margins, while the bear case centers on valuation concerns and competitive threats. The most critical tension is whether the current growth rate (~10% YoY) justifies a P/E of 24x, especially if growth decelerates. Currently, the evidence slightly favors the bear side due to the analyst target gap and mixed sentiment, but the strong profitability and low beta provide a floor. The resolution of this tension will likely depend on upcoming earnings and the adoption of newer solutions like TotalCloud.
Bullish
- Strong Revenue Growth: Q1 2026 revenue grew 10.47% YoY to $176.65M, with sequential acceleration from $159.90M in Q1 2025. This steady growth indicates robust demand for cloud security solutions.
- High Gross Margin: Gross margin stands at 83.43%, reflecting the scalable SaaS model. This high margin provides a strong foundation for profitability and cash flow generation.
- Attractive Valuation vs. History: Trailing P/E of 24.21x is near the lower end of its 5-year range (15.47x-61.26x), suggesting the stock is not overvalued relative to its own history. This provides a margin of safety for long-term investors.
- Strong Profitability: Operating margin of 35.62% and net margin of 28.67% demonstrate excellent operational efficiency. EBITDA of $68.03M in Q1 2026 underscores the company's ability to convert revenue into profits.
Bearish
- Analyst Price Target Below Current Price: The average analyst price target of $171.74 is 5.6% below the current price of $181.98, indicating that analysts see limited upside or potential downside. This suggests the stock may be overvalued in the near term.
- Mixed Analyst Sentiment: With a consensus 'Hold' rating (mean 2.68) and 5 Sell ratings out of 18 analysts, sentiment is cautious. Recent downgrades (e.g., William Blair) add to the bearish pressure.
- High Valuation vs. Growth Rate: PEG ratio of 1.48 suggests the stock is expensive relative to its growth rate. With revenue growth of ~10%, the P/E of 24x implies a PEG above 1, indicating potential overvaluation.
- Potential for Significant Downside: The analyst low target of $95.35 implies a 47.6% downside from the current price. This wide target range highlights uncertainty and the risk of a sharp correction if growth disappoints.
QLYS Technical Analysis
Qualys is in a powerful uptrend, with the stock price surging 39.32% over the past year and currently trading at $181.98, which is 90.3% of its 52-week range (between $74.51 low and $201.54 high). This positioning near the highs indicates strong momentum and investor confidence, though it also raises concerns about potential overextension. The stock's 6-month change of 96.40% and 3-month change of 77.77% underscore the acceleration in the trend, with the price having more than doubled from its April lows.
Beta
0.58
0.58x market volatility
Max Drawdown
-50.5%
Largest decline past year
52-Week Range
$75-$202
Price range past year
Annual Return
+39.3%
Cumulative gain past year
| Period | QLYS Return | S&P 500 |
|---|---|---|
| 1m | +29.8% | +3.6% |
| 3m | +77.8% | +2.7% |
| 6m | +96.4% | +11.4% |
| 1y | +39.3% | +18.7% |
| ytd | +38.9% | +12.3% |
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QLYS Fundamental Analysis
Qualys's revenue growth is robust, with the latest quarter (Q1 2026) reporting revenue of $176.65 million, a 10.47% year-over-year increase. This growth is consistent with the prior quarters, as revenue has risen sequentially from $159.90 million in Q1 2025 to $176.65 million in Q1 2026, indicating steady acceleration. The company's gross margin remains exceptionally high at 83.43%, reflecting its software-as-a-service model, and net income for the quarter was $50.64 million, yielding a net margin of 28.67%. Operating income of $62.93 million and EBITDA of $68.03 million highlight strong operational efficiency, with operating margin at 35.62%.
Quarterly Revenue
$176648000.0B
2026-03
Revenue YoY Growth
+10.5%
YoY Comparison
Gross Margin
83.4%
Latest Quarter
Free Cash Flow
$290487000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is QLYS Overvalued?
Given Qualys's positive net income, the trailing P/E ratio of 24.21x is the primary valuation metric, with a forward P/E of 21.63x, implying the market expects continued earnings growth. The gap between trailing and forward P/E suggests an anticipated earnings increase of about 12% over the next year. Compared to the software industry average P/E of approximately 30x, Qualys trades at a discount of about 19%, which may be justified by its slightly lower growth rate relative to high-flying peers. Historically, Qualys's P/E has ranged from 15.47x to 61.26x over the past five years, and the current 24.21x is near the lower end of that range, suggesting the stock is not overvalued relative to its own history.
PE
24.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 15x~61x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
17.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a moderate debt-to-equity ratio of 0.17, indicating low leverage, but the company's reliance on continued growth to justify its valuation is a concern. With a P/E of 24x and a PEG of 1.48, any slowdown in revenue growth (currently 10.47% YoY) could lead to multiple compression. The company's high gross margin of 83.43% is a strength, but operating expenses (SGA and R&D) consume a significant portion of revenue, leaving limited room for margin expansion if growth stalls. Free cash flow is positive at $290.49M TTM, providing a cushion, but the payout ratio is 0%, so no dividend support for investors.
FAQ
The key risks are: 1) Financial risk: If revenue growth decelerates below 10%, the P/E of 24x could compress, leading to a significant price drop. 2) Competitive risk: Larger cybersecurity firms could intensify competition, pressuring market share. 3) Macro risk: An economic downturn could reduce IT spending, impacting growth. 4) Company-specific risk: The stock's high volatility (6-month change of 96.4%) means sharp swings are possible. The most severe risk is a growth stall, which could lead to a 47.6% decline to the analyst low target.
The 12-month forecast is mixed: the base case (50% probability) sees the stock trading around $171.74, the average analyst target, with a range of $165-$185. The bull case (25% probability) targets $200-$220 if growth accelerates, while the bear case (25% probability) could see the stock fall to $95-$120 if growth disappoints. The most likely scenario is the base case, assuming revenue growth remains around 10% and margins stay stable.
QLYS is fairly valued relative to its own history, with a trailing P/E of 24.21x near the lower end of its 5-year range (15.47x-61.26x). Compared to the software industry average P/E of ~30x, it trades at a 19% discount, suggesting it is undervalued. However, the PEG ratio of 1.48 indicates the stock is not cheap relative to its growth rate. The market is pricing in moderate growth expectations, and the valuation is reasonable but not a bargain.
QLYS is a good buy for investors with a long-term horizon who value stability and profitability. The stock has strong fundamentals with a 10.47% revenue growth and 83.43% gross margin, but the current price is 5.6% above the average analyst target of $171.74, indicating limited near-term upside. The biggest downside risk is a 47.6% decline to the analyst low target of $95.35 if growth disappoints. For risk-tolerant investors, it could be a buy on dips below $150, but for others, waiting for a better entry point may be prudent.
QLYS is more suitable for long-term investment due to its stable growth and profitability. With a beta of 0.581, it is less volatile than the market, making it a good core holding for a diversified portfolio. The company's high gross margin and positive free cash flow support long-term value creation. For short-term traders, the stock's recent momentum (77.77% in 3 months) offers opportunities, but the risk of a pullback is high. A minimum holding period of 3-5 years is recommended to ride out volatility and benefit from compounding growth.