The cybersecurity industry is booming.
The economy has undergone a major shift since the COVID-19 pandemic began. Economic shutdowns accelerated long-term trends toward the digitization of businesses and the transition from in-office work to hybrid and remote work. The new hybrid workspace and an increasing reliance on cloud-based infrastructure have made cybersecurity even more critical and complex. Cybercrime cost U.S. businesses more than $6.9 billion in 2021. Fortune Business Insights estimates the global cybersecurity market is expected to grow 13.4% annually and reach $376.3 billion by 2029. Here are 10 cybersecurity stocks to buy today, according to Bank of America.
SentinelOne Inc. (ticker: S)
SentinelOne provides endpoint protection platform products to protect its customers’ internet-connected devices from cyber threats. Analyst Tal Liani says SentinelOne benefits from the ongoing shift from on-premise platforms to cloud-based networks. In June, SentinelOne reported impressive first-quarter numbers, including 109.3% revenue growth and 110.1% annual recurring revenue growth. Liani says SentinelOne’s growth is coming from both existing customer renewals and new customer additions, and the company is demonstrating strength across all geographies. He says legacy displacements are a core growth driver. Bank of America has a “buy” rating and $30 price target for S stock, which closed at $27.74 on Aug. 17.
CrowdStrike Holdings Inc. (CRWD)
CrowdStrike is a cloud security software vendor. Liani says the company is well positioned to gain endpoint protection platform market share and expand its scalable cloud-native endpoint platform into other security markets over time. CrowdStrike reported 61% revenue growth and 64% subscription revenue growth in the most recent quarter. Liani says the company’s 57% year-over-year customer growth highlights its market share gains, and its gross customer retention rate recently hit a record 98%. In addition, he says CrowdStrike’s product pipeline has a long growth runway ahead. Bank of America has a “buy” rating and $210 price target for CRWD stock, which closed at $196.89 on Aug. 17.
Zscaler Inc. (ZS)
Zscaler is a cloud security software vendor and a leader in zero-trust security. Liani recently attended Zscaler’s customer conference, at which the company unveiled its new cloud native application protection platform product, Posture Control. Liani says Zscaler also highlighted several key core product innovations and is taking a smart approach to scaling its business, focusing on measured growth. Finally, Liani says he spoke to several Fortune 500 Zscaler customers across a number of different market sectors, and the majority of feedback was positive. Bank of America has a “buy” rating and $195 price target for ZS stock, which closed at $174.35 on Aug. 17.
Palo Alto Networks Inc. (PANW)
Palo Alto Networks is a global cybersecurity vendor. Liani is bullish on the company’s market share gains in its legacy firewall business and its significant growth opportunities in cloud security and artificial intelligence. Palo Alto’s billings were up 39.7% and Next Generation Security annual recurring revenue was up 65% in the fiscal third quarter. Liani says the strong Next Generation Security growth was balanced across Prisma Cloud, Prisma SASE and Cortex. Liani projects greater than 20% annual revenue growth for Palo Alto through at least 2024. Bank of America has a “buy” rating and $650 price target for PANW stock, which closed at $514.51 on Aug. 17.
Check Point Software Technologies Ltd. (CHKP)
Check Point Software Technologies is an Israel-based cybersecurity company that provides network security products and other cybersecurity solutions. Despite the booming cybersecurity industry, Check Point shares are only up about 8% in the past three years. Liani says the underperformance has set a low bar of expectations on Wall Street, and Check Point should be well positioned to outperform moving forward. Revenue was up 8.6% in the second quarter. Liani says margins are bottoming, and he projects 8% free cash flow growth in 2023. Bank of America has a “buy” rating and $140 price target for CHKP stock, which closed at $123.37 on Aug. 17.
Dynatrace Inc. (DT)
Dynatrace provides a unified application and infrastructure monitoring platform for enterprise customers. Analyst Koji Ikeda says Dynatrace has an impressive long-term growth outlook and a differentiated AI-based technology platform. Fiscal first-quarter revenue was up 23%, including 27% subscription revenue growth. Dynatrace’s net expansion ratio was also above 120%for the 17th consecutive quarter. The company guided for fiscal 2022 revenue growth of 22%, but Ikeda says the conservative guidance creates opportunities for large beat-and-raise quarters ahead. He projects strong annual recurring revenue growth and healthy margins in the medium term. Bank of America has a “buy” rating and $55 price target for DT stock, which closed at $41.31 on Aug. 17.
Splunk Inc. (SPLK)
Splunk provides a software platform for collecting, organizing and analyzing machine-generated data, such as log files and configuration files. Analyst Brad Sills says Splunk is one of the leading big-data stock plays given its disruptive technology and rapidly growing customer base. Sills attended Splunk’s annual conference in June and says the company remains the leader in logging. He projects Splunk will maintain growth rates in the mid-20% range and expand operating cash flow margins above 20% over time, making it an excellent “rule of 40” investment. Bank of America has a “buy” rating and $120 price target for SPLK stock, which closed at $109.58 on Aug. 17.
Nice Ltd. (NICE)
Nice provides applications for handling call center operations, improving customer experience, detecting fraud and complying with regulations. Analyst Michael Funk says Nice is a market leader in the contact center-as-a-service industry, which has become increasingly attractive as enterprises shift their point of contact with customers from in-store, in-person interactions to contact centers. Funk says Nice is a secular growth story that is gaining market share, and the company’s cloud growth is accelerating as it replaces legacy incumbents. Funk projects 12.7% revenue growth in 2022. Bank of America has a “buy” rating and $285 price target for Nice stock, which closed at $228.54 on Aug. 17.
First Advantage Corp. (FA)
First Advantage provides human capital technology solutions for background screening, verifications, safety and compliance. Analyst Heather Balsky says First Advantage is a leader in high-growth global markets, has an attractive business model and is gaining market share. Balsky projects 17.3% revenue growth in 2022, yet First Advantage shares trade at just 13.2 times her 2022 earnings forecast. In addition, she says First Advantage is positioned to deliver modest sales growth even during a mild economic downturn thanks to its high-growth verticals and product innovation. Bank of America has a “buy” rating and $18 price target for FA stock, which closed at $15.32 on Aug. 17.
KnowBe4 Inc. (KNBE)
KnowBe4 is a security software provider focused on security awareness training. Liani says KnowBe4 is gaining market share in the security awareness training market and has opportunities to expand its cloud-native platform into adjacent security markets over time. KnowBe4 reported 36.1% revenue growth in the second quarter, and Liani projects full-year sales growth of 35.8% in 2022 and 25.7% in 2023. He says KnowBe4 has consistently demonstrated healthy underlying fundamentals and effective management, and he expects a strong second half of 2022. Bank of America has a “buy” rating and $20 price target for KNBE stock, which closed at $20.18 on Aug. 17.
10 best cybersecurity stocks to buy now:
— SentinelOne Inc. (S)
— CrowdStrike Holdings Inc. (CRWD)
— Zscaler Inc. (ZS)
— Palo Alto Networks Inc. (PANW)
— Check Point Software Technologies Ltd. (CHKP)
— Dynatrace Inc. (DT)
— Splunk Inc. (SPLK)
— Nice Ltd. (NICE)
— First Advantage Corp. (FA)
— KnowBe4 Inc. (KNBE)
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10 Best Cybersecurity Stocks to Buy Now originally appeared on usnews.com
Update 08/18/22: This piece was published at an earlier date and has been updated with new information.
