Zinger Key Points
- Zscaler is “an attractive long-term growth opportunity,” the analyst said.
- Fortinet’s solutions are “tailor-fit to the current challenging macro backdrop,” she said in a note.
Cyber threats have become rampant and increasingly sophisticated. Against this backdrop, analyst Catharine Trebnick of Rosenblatt Securities initiated coverage of 5 key players in the cybersecurity landscape with Buy ratings.
“In the problematic macro backdrop, hyper-threat environment enterprises and government organizations continue to spend on security,” analyst Trebnick said in a note.
Price Targets
- CrowdStrike Holdings Inc CRWD - $170
- Palo Alto Networks Inc PANW - $250
- Zscaler Inc ZS - $135
- CyberArk Software Ltd CYBR - $175
- Fortinet Inc FTNT - $80
Check out other analyst stock ratings.
CrowdStrike Holdings
CrowdStrike’s high growth has resulted in “operating margin leverage and free cash flow margins of 30%+,” Trebnick said.
The company has a range of emerging products, including Identity, Log Scale, Observability, and Cloud Security, which could add incremental revenue growth, the analyst stated. “CrowdStrike can continue generating strong Free Cash Flow growth at scale, which should provide further support for a premium valuation,” she added.
Palo Alto Networks
Palo Alto Networks is “transitioning to a software-focused model, with over 75% of total revenue derived from subscriptions and services,” Trebnick wrote.
“Driving FY23 +25% Y/Y growth and free cash flow margins of +38% are the company's three pillars of growth: Networks Security, Prisma Cloud and Security Operations,” she added. Palo Alto Networks is well positioned as companies are now “looking to simplify the networks, reduce the number of best-of-breed suppliers and reduce costs,” the analyst mentioned.
Zscaler
Zscaler is “an attractive long-term growth opportunity,” as enterprises are now seeking “a superior platform for Zero Trust to consolidate functionality” and to ensure continuous protection “regardless of location, geography, office, home, and/or public WiFi,” Trebnick said in a note.
“A growing end market combined with industry-leading products and innovation should allow Zscaler to sustain 25%+ top-line growth plus operating margin and free cash flow expansion well above peers,” she added.
CyberArk Software
“The company's strong competitive position and accelerated transition to a subscription model warrant a premium valuation relative to peers,” Trebnick wrote.
“Annual Recurring Revenue (ARR) growth continues to exceed the company's overall growth rate, driving future revenue growth,” the analyst said. “The rapid rise in mobile workers, hybrid and multi-cloud adoption, and enterprise digitalization drive higher enterprise priority for Identity Security,” she added.
Fortinet
Fortinet’s solutions are “tailor-fit to the current challenging macro backdrop,” Trebnick said in a note.
The company’s total addressable market (TAM) has expanded to $280 billion, given its “broad product portfolio that expands beyond network security and encompasses SASE, IoT/OT, Endpoint, SIEM, and other major security categories,” the analyst stated.
“Based on our expectations for growth, we expect the company to continue generating strong profitability and free cash flow,” she added.
CRWD, PANW, ZS, CYBR, FTNT Price Action: Shares of CrowdStrike Holdings, Palo Alto Networks, Zscaler, CyberArk Software and Fortinet were all trading lower at the time of publication Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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