CLBT

We rate Cellebrite DI Ltd. (CLBT) as a Hold with a composite score of 55.4/100 at a current price of $12.61. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (91th percentile) and stability (68th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (34th percentile) and momentum (37th percentile) tempers our overall conviction. We assign a Narrow Moat rating (63/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Cellebrite DI Ltd. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 55.4/100 places it at rank #1218 in our full 7,333-stock universe. At $4.5B in market capitalization, Cellebrite DI Ltd. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 23%, though momentum at the 37th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 84% (+24.8pp vs sector) narrow to operating margins of 14% (+10.7pp vs sector) and net margins of -70.5%, yielding a gross-to-net conversion rate of -84%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $12.61, Cellebrite DI Ltd. is trading at a premium to fundamental value. Our value factor score of 37/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at P/B of 9.6x, P/S of 2.0x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to Cellebrite DI Ltd.. The stock presents a balanced risk profile: current negative profitability (net margin -70.5%). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -70.5%). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 68th percentile and quality factor at the 91th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 84% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; above-average stability (68th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Cellebrite DI Ltd.'s capital allocation as Poor. Key concerns include low returns on equity (-336.9%), negative profitability, weak asset returns (ROA -163.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Cellebrite DI Ltd. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Cellebrite DI Ltd. receives a Hold rating with a composite score of 55.4/100 (rank #1218 of 7,333). Our quantitative framework assigns a Narrow Moat (63/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on Cellebrite DI Ltd.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.