As the world becomes more advanced due to technological advances, the demand for cybersecurity solutions is also rapidly increasing. These cyber-attacks are becoming more frequent, making protecting sensitive information a greater priority than ever.
Given this, investors looking to tap into this dynamic sector should look to cybersecurity stocks like CrowdStrike Holdings (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT). I might consider that. These companies are deploying advanced AI tools to automate threat detection and strengthen defense systems.
Businesses and governments invest heavily to protect sensitive information from data breaches and ransomware incidents. The U.S. government is proposing $13 billion in funding across civilian agencies for fiscal year 2025, including $3 billion in enhanced funding for the Cybersecurity and Infrastructure Security Agency (CISA), an increase of $13 billion from the previous year. It has increased by $3 million.
Additionally, cyberattacks are only on the rise this year, with 41% of small and medium-sized businesses exposed to cyberthreats. The US is the most affected region for ransomware attacks, accounting for 59% of ransomware attacks. This makes hardening your defenses more important than ever, leading to a proliferation of cybersecurity solutions.
Therefore, the global cybersecurity market is expected to reach $562.72 by 2032, growing at a CAGR of 14.3%.
Cybersecurity companies are developing solutions to protect mobile devices, IoT systems, and corporate networks from advanced threats, making the industry attractive to long-term investors.
With that in mind, let’s analyze the fundamentals of the three software-security stocks listed above, starting with #3.
Stock #3: CrowdStrike Holdings, Inc. (CRWD)
CRWD is a global cybersecurity company that provides cloud-delivered protection for endpoints, cloud workloads, identity, and data. The company’s Falcon platform is designed for cybersecurity integration and built to stop breaches. The platform collects and unifies data from across the enterprise, including endpoints, cloud workloads, identities, and third-party sources.
On October 23, CRWD announced that it has partnered with Omnissa, a leading digital work platform company, to provide real-time threat detection and automated remediation for virtual desktop infrastructure (VDI) and physical desktop environments.
This strategic partnership, which integrates CRWD’s Falcon into the Omnissa platform, will enhance interconnected threat detection and remediation and improve cyber resiliency in virtualized environments.
In the same week, CRWD and FTNT announced a strategic partnership to integrate AI-native endpoint security and next-generation firewall protection. This gives customers and partners the flexibility, visibility, and security to stop breaches across networks, applications, and endpoints. The partnership will integrate CRWD’s Falcon cybersecurity platform with FTNT’s next-generation firewall.
CRWD’s revenue for the second quarter (ending July 31, 2024) was $963.87 million, an increase of 31.7% year-on-year. The company reported gross profit of $726.47 million, representing year-over-year growth of 32.4%. CRWD’s non-GAAP net income was $260.76 million and $1.04 per share, increases of 44.9% and 40.5%, respectively, from the prior year period.
CRWD expects full-year 2025 total revenue to be in the range of $3.89 billion to $3.9 billion and non-GAAP operating income in the range of $774.7 million to $783.9 million. The company also expects non-GAAP net income to be between $908.8 million and $918 million, or $3.61 to $3.65 per share.
Analysts expect CRWD’s sales for the third quarter (ending October 2024) to be $983.05 million, an increase of 25.1% year over year. However, the consensus EPS estimate for the period is $0.81, indicating a year-over-year decline of 1.4%. For the fiscal year ending January 2025, Street expects CRWD’s revenue and EPS to increase 27.7% year over year and 17.9% to $3.9 billion, or $3.64.
Shares have increased 79.9% over the past year, closing at $310.94.
CRWD’s stance is clear in its POWR ratings. The stock has an A grade for growth potential and a B grade for quality. POWR ratings are calculated by considering 118 different factors, each weighted to the best degree.
Ranked #17 out of 21 stocks in the Software – Security industry. Click here to see additional ratings (Value, Momentum, Stability, Sentiment) for CRWD.
Stock #2: Palo Alto Networks, Inc. (PANW)
PANW is a provider of cybersecurity solutions. The company’s platforms and services are designed to protect enterprise users, networks, clouds, and endpoints through cybersecurity measures backed by artificial intelligence and automation. PANW focuses on four areas: Network security. cloud security. Security operations and threat intelligence. and security consulting.
On October 21, PANW introduces new OT security solution powered by Precision AI to protect remote OT operations, reduce risk to critical OT assets, and extend security to harsh industrial environments. I did. This new capability will also help customers simplify operations and increase organizational efficiency to address vulnerabilities in real-time without disruptive downtime.
In the same month, PANW announced the expansion of its strategic partnership with Deloitte in the EMEA and JAPAC regions. Deloitte’s agreement to adopt PANW’s cloud and network security platform provides mutual customers with an integrated platform to help them deliver better cybersecurity solutions.
PANW’s revenue for the fourth quarter ended July 31, 2024 was $2.19 billion, an increase of 12.1% from the same period last year. The company’s gross profit increased 11.7% year over year to $1.62 billion. Additionally, non-GAAP net income was $522.2 million and $1.51 per share, increases of 8.2% and 4.9%, respectively, from the prior year.
Looking forward, PANW expects fiscal 2025 first quarter revenue to be between $2.1 billion and $2.13 billion, reflecting 12% to 13% year-over-year growth. The company also expects non-GAAP earnings per share to be in the range of $1.47 to $1.49, representing annual growth of 7% to 8%.
The consensus revenue estimate for the first quarter (ending October 2024) is $2.12 billion, representing a 12.9% year-over-year increase. Consensus EPS estimate of $1.48 for the quarter represents an improvement of 6.9% from the year-ago period. The company has an amazing and amazing history. The company beat consensus revenue and EPS estimates in each of the trailing four quarters.
Shares have increased 53% over the past year and 24.5% over the past six months, closing at $365.39.
PANW’s fundamentals are reflected in the POWR Rating. This stock has a B grade for sentiment and quality. It ranks 12th out of 21 stocks in its industry.
In addition to the above, we also evaluated PANW for growth, value, momentum, and stability. All PANW ratings are available here.
Stock #1: Fortinet, Inc. (FTNT)
FTNT provides cybersecurity and integrated network and security solutions worldwide. The company provides secure networking solutions with a focus on convergence of networking and security, network firewall solutions, wireless LAN solutions, and secure connectivity solutions.
On October 8, FTNT announced expansions to its cloud native application, Lacework FortiCNAPP. It’s a unified AI-driven platform that protects everything from a single vendor’s code to the cloud. This expansion strengthens the company’s position in the market as Lacework FortiCNAPP maximizes cloud security and assists in threat detection and investigation.
On September 10, FTNT announced the opening of an innovation hub in Chicago. This new facility will enhance collaboration with customers, partners, employees, and other stakeholders as we expand FTNT’s cloud point of presence, research and development, and training facilities. The opening should help expand the company’s global cloud footprint.
FTNT’s total revenue for the second quarter of 2024, ending June 30, was $1.43 billion, an increase of 10.9% year over year. Gross profit increased 16.3% year-on-year to $1.16 billion.
Non-GAAP operating income increased 44.7% year over year to $503.6 million, and non-GAAP net income increased 46.4% year over year to $439.9 million. Additionally, the company’s non-GAAP EPS for the quarter was $0.57, an increase of 50% year over year.
FTNT expects fiscal 2024 revenue to be between $5.8 billion and $5.9 billion and billings between $6.4 billion and $6.6 billion, according to the company’s guidance. Additionally, we expect non-GAAP gross margin to decline between 79% and 80% and non-GAAP net income per share to be in the range of $2.00 to $2.04.
Street expects FTNT’s fiscal third-quarter revenue (ending September 2024) to be $1.48 billion, an increase of 10.9% year over year. Additionally, estimated EPS of $0.52 for the same period represents year-over-year growth of 27.1%. Additionally, it beat consensus EPS estimates in each of the trailing four quarters, which is great.
FTNT stock has risen 41.1% over the past year and 38.3% over the past three months, closing at $79.37.
FTNT’s PoWR rating reflects its promising outlook. The stock has an overall rating of B, which equates to a Buy according to our proprietary rating system.
FTNT has an A grade for quality and a B grade for sentiment. Software – Ranked #6 in the security industry. Click here to see other ratings for FTNT on Growth, Value, Momentum and Stability.
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PANW stock was trading at $362.22 per share Wednesday afternoon, down $3.17 (-0.87%). Year-to-date, PANW has gained 22.84%, compared to a gain of 23.44% for the benchmark S&P 500 index during the same period.
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