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The Zacks Analyst Blog Highlights: Fortinet, Palo Alto Networks, Radware and Qualys

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·8 min read
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For Immediate Release

Chicago, IL – December 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Fortinet, Inc. FTNT, Palo Alto Networks, Inc. PANW, Radware Ltd. RDWR and Qualys, Inc. QLYS.

Here are highlights from Monday’s Analyst Blog:

4 Cybersecurity Stocks to Watch in 2022

Cybersecurity solution providing companies are benefiting from rising demand for IT security solutions owing to a surge in the number of data breaches. Increasing requirements for privileged access security on the back of digital transformation and cloud migration strategies are also fueling demand for cybersecurity solutions.

Additionally, the industry is benefiting from solid demand for cybersecurity offerings as well as the heightening need for secure networks and cloud-based applications amid the COVID-19 pandemic-induced remote-working and online learning wave. Industry participants like FortinetPalo Alto NetworksRadware and Qualys are gaining from the aforementioned trends.

Pandemic & Technological Advancement Driving Cyber Crimes

In an attempt to contain the spread of COVID-19, most companies are continuing their work-from-home policies. Moreover, the majority of schools and colleges all over the world are continuing their remote learning curriculum to ensure the continuation of courses.

Amid all the outbreak-related disruptions, hackers and cybercriminals are reportedly taking advantage of the pandemic-induced hype and using it to steal passwords and data.

Moreover, the ongoing digital transformation and proliferation of smart connected devices supported by artificial intelligence (AI) and its tools like machine learning (ML) are exposing vulnerabilities in security systems globally.

The growing incidents of AI and ML driven advanced security attacks or “smart attacks” have become a headwind for cybersecurity solution providers. As most enterprises transition to the cloud, traditional control panels are becoming insufficient to prevent and manage smart attacks.

Cyber criminals are using malicious chatbots to interact with potential victims and manipulate private information out of them. Current technologies like firewalls and host-based security tools are not strong enough to effectively combat threats of this kind. This is making it increasingly important for more stringent and advanced security like identity-based application security, and a considerable amount is being spent on research and development in this area.

Huge Growth Prospects for Cybersecurity Solution Providers

Though billions of dollars and data are lost due to cybercrime, there is a positive side to it. Cybersecurity companies stand to gain from data breaches as the chances of security-related purchases shoot up.

According to a report by Grand View Research, the global cybersecurity market is expected to witness a CAGR of 10.9% from 2021 to 2028 and reach $372 billion. Moreover, the report stated that the market's growth will be driven by factors like the rising sophistication of cyberattacks.

With the emergence of the more contagious coronavirus variant — Omicron — several parts of the world are grappling with a massive spike in infection rates, leading to stringent lockdowns. Even some parts of the United States are witnessing Omicron variant outbreaks.

Additionally, as vaccination programs will still take several months to reach a major portion of the global population, these factors are likely to continue to benefit cybersecurity companies in 2022. Let’s thus take a closer look at some notable cybersecurity stocks that could generate double-digit returns next year.

Fortinet: It provides multiple levels of security protection. Demand for Fortinet’s products, such as firewall, virtual private networking (VPN), antivirus, intrusion prevention (IP), web filtering, anti-spam and wide area network (WAN) acceleration has gained momentum amid the pandemic.

Per IDC, in terms of revenues, Fortinet ranks third in Unified Threat Management (UTM) and is one of the fastest-growing segments in Network Security. The company’s focus on enhancing its UTM portfolio will boost its market share as well as maintain the leadership position.

Also, the growing uptake of Software-Defined Wide Area Network (SD-WAN) solutions is likely to be a key catalyst for Fortinet in the long run. The buyouts of AccelOps, Meru Networks, Coyote Point, XDN, ZoneFox and Bradford Networks will stoke long-term growth.

Fortinet’s huge customer base of more than 450,000 helps it upsell products within its installed user base. It is currently focusing on selling more subscription-based services, which will generate stable revenues and bolster its margins as well.

Fortinet’s robust balance sheet with ample liquidity and no debt is very impressive, which, in turn, will support business growth.

The stock carries a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus mark for Fortinet’s 2022 earnings has been revised upward to $4.64 per share from $4.50 in the past 60 days. The long-term expected earnings growth rate is pegged at 15%. FTNT shares have rallied 135% year to date (YTD), outperforming the Zacks Security market’s rise of 48%.

Palo Alto Networks: This Zacks Rank #3 company offers network security solutions to enterprises, service providers and government entities worldwide. Palo Alto Networks has been benefiting from continuous deal wins and increasing adoption of the company’s next-generation security platforms, attributable to the rise in the remote work environment and need for stronger security.

Strong demand for form factor hardware products, particularly the recently launched ML-powered models that ensure zero-trust network security for organizations are expected to have contributed to Palo Alto Networks’ quarterly performance.

Growing traction in Strata, Prisma and Cortex offerings are acting as a tailwind. The acquisition of Bridgecrew earlier this year has enhanced the capabilities of Prisma and Cortex product capabilities, thereby helping Palo Alto Networks in attracting more customers.

The consensus mark for fiscal Palo Alto Networks’ 2022 earnings has been unchanged at $7.24 per share over the past 30 days. The long-term expected earning rate is pegged at 29.3%. Shares of PANW have increased 58.1% YTD.

Radware: The company develops, manufactures and markets products that manage and direct Internet traffic among network resources to enable continuous access to websites and other services, applications and content based on Internet protocol.

Radware is gaining traction from stellar software growth, backed by a solid uptick in public cloud and security offerings. Also, it is benefiting from the growing demand for consistent application security across multi-cloud environments, which is aiding revenue growth.

This Zacks Rank #3 stock has appreciated 38.1% YTD. The consensus mark for Radware’s 2022 earnings has been revised 4.2% upward to 99 cents per share in the past 30 days.

Qualys: This Zacks Rank #3 company offers cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructures, thus helping protect their IT systems and applications from cyber-attacks.

Qualys is gaining from the surging demand for security and networking products amid the coronavirus crisis as a massive global workforce is working remotely. Accelerated digital transformations by organizations are also fueling demand for the company’s cloud-based security solutions.

The Zacks Consensus Estimate for Qualys’ 2022 earnings has moved 5.6% north to $3.41 per share over the past 60 days. Qualys’ shares have risen 14.4% YTD.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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