TD Cowen sees value in Netskope as peers trim targets
While TD Cowen maintains a Buy rating with a $19 price target citing intact industry trends, rival firms RBC Capital and Morgan Stanley have lowered their valuations, highlighting a divergence in market sentiment.
TD Cowen has reaffirmed its Buy rating for Netskope, Inc. (NASDAQ:NTSK), setting a price target of $19 following a meeting with the company’s management team. The firm described the current valuation as compelling, pointing to industry trends that remain largely intact and an expectation for sustained acceleration in annual recurring revenue (ARR) through fiscal year 2027.
The investment bank anticipates that Netskope’s free cash flow will improve in the latter half of next year, a development it believes could shift investor sentiment positively. TD Cowen positioned the California-based cybersecurity provider as a key growth investment for 2026, contrasting its optimism with recent caution from other major institutions.
This positive outlook stands in sharp contrast to actions taken by RBC Capital and Morgan Stanley on June 4. RBC Capital reduced its price target from $14 to $13, while Morgan Stanley trimmed its target from $18 to $14, though both firms maintained their respective overweight or outperform ratings.
RBC Capital’s downgrade was driven by concerns over a 300 basis points sequential deceleration in growth and a narrowing gap between ARR and revenue beats. Despite noting that Netskope reported 29 per cent year-on-year ARR growth, which exceeded consensus estimates, the firm warned that these deceleration metrics would remain a concern for investors.
Morgan Stanley adopted a similar cautious stance, describing Netskope as a “show-me story for now.” The firm argued that the company’s current growth trajectory is not appropriately valued at existing price levels, contributing to the broader divergence in analyst sentiment regarding the cybersecurity sector’s near-term prospects.
Founded in 2012, Netskope provides security, networking, and analytics solutions to enterprises. As the company navigates a complex market environment, the split in analyst views highlights the challenges in pricing high-growth technology stocks amid fluctuating growth rates and macroeconomic uncertainties.
