Cognyte Software is a buy, this analyst says

Roth Capital Markets analyst Taz Koujalgi initiated coverage of Cognyte Software (Cognyte Software Stock Quote, Chart, News, Analysts, Financials NASDAQ:CGNT) with a “Buy” rating and a 12-month target price of US$14.00 in an Oct. 3 report, citing accelerating growth, expanding margins and an attractive valuation relative to peers.

Shares closed October 3rd at US $8.44.

Cognyte is an Israel-based intelligence analytics company that provides data processing and investigative analytics tools to security agencies and law enforcement worldwide. The company, spun off from Verint Systems in 2022, leverages AI and machine learning to help agencies analyze large, complex data sets to prevent and investigate crime and terrorism.

Koujalgi described Cognyte as a “leader in intelligence analytics” with deep domain expertise in national security and law enforcement, which he said underpins its competitive edge. Its modular platform fuses and analyzes data from multiple sources, enabling insights that “would otherwise not be possible,” and supports a wide range of use cases.

Growth is driven by a “land and expand” model, with customers starting small and increasing spend as they process more data and adopt additional modules. Roughly half of Cognyte’s revenues are recurring, and its cRPO (Current Remaining Performance Obligation) coverage ratio is in the mid-80% range, giving strong forward visibility.

Revenue growth has accelerated to about 15.5% year over year in the first half of fiscal 2026, up from 12.5% in the second half of fiscal 2025, while operating margins improved to roughly 8% from 5% over the same period. Adjusted EBITDA margins are expected to reach about 11% by the end of fiscal 2026, up from 8% at the end of fiscal 2025.

Koujalgi pointed to U.S. market expansion as an incremental growth driver. Cognyte currently has a limited U.S. presence but recently announced a strategic partnership with LexisNexis to broaden its reach.

He said the stock offers an attractive risk/reward profile. Cognyte trades at about 1.3× FY27E EV/sales (0.12× EV/S/g) and 12× FY27E EV/FCF (1.1× EV/FCF/g), well below cybersecurity sector medians of 0.66× EV/S/g and 2.4× EV/FCF/g. Koujalgi’s US$14.00 price target is based on 20× FY27E EV/FCF, which he said remains conservative relative to peers.

Risks include exposure to government budget trends and customer concentration, with two government entities representing around 28% of revenues. Koujalgi noted, however, that these entities purchase on behalf of multiple agencies, mitigating concentration risk.

“We believe Cognyte is well-positioned competitively with deep domain expertise and focus on analytics applied to national security and law enforcement use cases,” Koujalgi said. He expects accelerating growth, margin expansion and U.S. market opportunities to drive upside from current levels.

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