In a noted dated July 15, Goldman Sachs analyst Matthew Niknam provided some insight into why he has come out bullish on the software security sector.
His main points included an evolving cyber threat landscape and an environment supportive of increased M&A activity.
In respect to the growing cyber threat, Niknam viewed recent data breaches at companies such as Target and eBay, as well as an expected firewall refresh as a potential tailwind. To support this view, Niknam cited Goldman's proprietary IT surveys, which highlighted the current growth rate in security spending as being the highest it has been since 2010.
As an additional tailwind, Niknam pointed to an expected spur in M&A activity in the sector from the "cash-rich" tech sector.
Niknam made the following calls:
- FireEye(NASDAQ: FEYE) - Assumed coverage at a Buy with a $42 price target.
- Palo Alto Networks (NYSE: PANW) - Initiated at Conviction Buy, $97.
- Proofpoint (NASDAQ: PFPT) - Initiated at Buy, $42.
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