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As geopolitical tensions rise and cyber assaults turn into more and more widespread, the cyber safety sector has “rock stable” fundamentals and it ought to outperform for various causes, with Palo Alto Networks (NASDAQ:PANW) being the highest choose at Morgan Stanley.
Analyst Hamza Fodderwala, who has an outperform ranking on Palo Alto, famous that the latest fourth-quarter outcomes from roughly 80% of the businesses within the sector noticed “accelerating” topline progress within the fourth-quarter, whereas their preliminary outlooks for 2022 had been “all nicely forward of consensus and point out robust pipelines.”
“We expect robust safety demand ought to stay sturdy by means of ’22 and, because of this, safety shares present higher alternatives for relative outperformance vs broader software program for 3 key causes,” Fodderwala wrote, including that rising threats, a rise in defensible budgets and extra favorable valuations within the area are seemingly to assist help shares.
Along with making Palo Alto the companies high choose, small to mid-cap shares like SailPoint Applied sciences (NYSE:SAIL), KnowBe4 (NASDAQ:KNBE) and ForgeRock (NYSE:FORG) look oversold.
All 4 shares had been increased in premarket buying and selling, led by a 2% acquire in SailPoint.
Because the tensions over Russia’s invasion of Ukraine proceed to boil, the agency famous that the neighborhood is now on “excessive alert,” based mostly on latest conversations.
“The Cybersecurity & Infrastructure Company lately issued a “shields up” advisory to personal sector organizations with steering on the best way to be higher protected towards potential state-sponsored cyberattacks,” Fodderwala added. “We expect there’s seemingly upward stress on federal cyber budgets (at present penciled in at ~$20B in FY22).”
Earlier this month, J.P. Morgan mentioned Palo Alto Networks is “nicely positioned to compete for the cloud safety alternative.”
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