11. Qualys, Inc. (NASDAQ:QLYS)
52 Week Range: $119.32 – $206.35
Current Share Price: $123.32
Short % of Shares Outstanding: 10.15%
Number of Hedge Funds holding stakes as of Q2 2024: 31
Qualys, Inc. (NASDAQ:QLYS) is a technology company that provides a cloud-based platform for delivering information technology security and compliance solutions. It is best known as a cybersecurity company owing to its cloud-based security and compliance solutions.
While Qualys, Inc. (NASDAQ:QLYS) is trading close to its 52-week lows, its underperformance can be attributed to, among other things, highly volatile market conditions amid macroeconomic uncertainties. Growing fears over the Federal Reserve monetary policy trajectory and looming fears of U.S. recession have rattled the company’s sentiments.
Nevertheless, the sluggish sales growth has affirmed why Qualys, Inc. (NASDAQ:QLYS) is one of the worst 52-week low stocks to buy now, according to short sellers. The company’s revenue growth rate slowed down to a single-digit percentage range in the second quarter of 2024, marking a significant drop from the double-digit growth it has consistently achieved in each quarter since 2013. Revenues came in at $148.7 million, up 8% year over year.
Businesses putting off their big I.T. investment plans due to a weakening worldwide economy and continuing macroeconomic uncertainties have once again cast doubts on the company’s long-term prospects.
Some cybersecurity companies have noted that organizations must put off or take longer to finalize agreements or are even scaling back on agreements in the current uncertain economic climate. Shifts in consumer spending habits are also impacting Qualys, Inc. (NASDAQ:QLYS) earnings growth.
Concerns about the company’s growth metrics have been the catalyst behind short interest on outstanding shares soaring to 10.15%. According to Insider Monkey’s second-quarter database, 31 hedge funds were long Qualys, Inc. (NASDAQ:QLYS), compared to 25 funds in the last quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 548,009 shares worth $78.15 million.
Here is what The London Company SMID Cap Strategy said about Qualys, Inc. (NASDAQ:QLYS) in its Q2 2024 investor letter:
“Initiated: Qualys, Inc. (NASDAQ:QLYS) – QLYS provides cybersecurity and compliance solutions, which enable its clients to identify, prioritize, and remediate risks to information technology infrastructures. QLYS also offers solutions through a software-as-a-service model, primarily with renewable annual subscriptions. QLYS should continue to benefit from the long-term secular tailwinds that drive sustainable growth in cybersecurity. QLYS’s products are critical but also low-cost relative to a company’s overall security budget, helping ensure high retention rates and recession resistance. We believe QLYS is among the best managed in the industry. Many past decisions have positioned QLYS ahead of peers in terms of product quality, structurally higher margins, and competitive moat. QLYS generates high operating margins with growing cash flow generation and has a very strong balance sheet. QLYS is also owned in our Small Cap portfolio.”
