The Cyber Security Market Is Still Strong (In Case You Forgot)

A new report by Bank of America analyst Tal Liani focuses on the latest numbers from the cybersecurity space and discusses Bank of America’s outlook for several of the major cybersecurity players. The report also includes several price target hikes for cybersecurity stocks.

The Numbers

Network security revenue grew by 8.0 percent year-over-year (Y/Y) in Q1, indicating an acceleration over the growth rates seen in Q1 during the past two years.

According to the report, integrated appliances such as unified threat managements (UTMs), firewalls and next-generation firewalls (NGFWs) were the key drivers in Q1.

Related Link: David Petraeus On Why Cybersecurity Is A 'Big, Big Challenge' For The U.S.

Market Share Inflection Point?

Liani writes that much of the strong recent market share growth at companies such as Check Point Software Technologies Ltd. CHKP, Fortinet Inc FTNT and Palo Alto Networks Inc PANW have come at the expense of Juniper Networks, Inc. JNPR. In the past five years, Juniper’s market share has fallen from 13.2 percent to only 5.3 percent.

However, Bank of America believes that Juniper’s share may now be stabilizing, and this stabilization could force competitors to find new organic growth sources.

“The growth rates of some traditional vendors in the market, like Check Point and Fortinet, could face pressure, a risk factor we believe is not being accounted for by investors,” Liani explains.

The Year Of Security

Overall, Bank of America believes that cybersecurity should be a major theme for investors in 2015.

In the report, the firm raised its price objectives for Fortinet ($43 to $47), Palo Alto Networks ($170 to $190), FireEye Inc FEYE ($55 to $60) and Cyberark Software Ltd CYBR ($70 to $80).