Palo Alto or CrowdStrike: Which Cybersecurity Stock Is A Safer Bet?, , on October 15, 2020 at 5:40 am

Financial News
By
On October 15, 2020
In Financial News
Tags:

Rapid digitization and the work from home trend amid the pandemic has made users and organizations more vulnerable to cyber-attacks. The demand for cybersecurity solutions, especially cloud-based security,  is rising as individuals and enterprises want to protect their information from phishing and malware threats.Indeed, according to Allied Market Research, the global cybersecurity market is forecast to reach $258.99 billion by 2025, reflecting a compounded annual growth rate or CAGR of 11.9% in the 2018 to 2025 period.We will analyze the recent performance of Palo Alto and CrowdStrike and use the TipRanks Stock Comparison tool to see which cybersecurity stock offers a more compelling investment opportunity.  Palo Alto Networks (PANW)Palo Alto is one of the leading names in the cybersecurity market and serves 75,000 customers in more than 150 countries. The company’s transition from its legacy firewall products to cloud cybersecurity solutions and a subscription-based business model has helped in strengthening its position. Palo Alto has three key platforms—Strata (network security platform), Prisma (cloud security solutions) and Cortex (artificial intelligence or AI-based continuous security platform).Acquisitions have been an integral part of Palo Alto’s growth strategy and have helped in expanding its portfolio and presence in key markets. Last month, the company completed the acquisition of The Crypsis Group, a leading incident response, risk management and digital forensics consulting firm for $265 million. The company believes that Crypsis’ security consulting and forensics capabilities will strengthen its threat intelligence Cortex XDR platform.Meanwhile, work-from-home tailwinds and continued strength in the next-gen security solutions (which comprises Cortex and Prisma platforms) helped in driving an 18% Y/Y growth in the company’s revenue to $950.4 million in 4Q FY20 (ended July 31). Billings (a key metric indicating future revenue) grew 32% to $1.4 billion in 4Q. For FY20, billings were up 23% to $4.3 billion and deferred revenue rose 32% to $3.8 billion. Adjusted EPS grew 0.7% to $1.48 in 4Q.Looking ahead, Palo Alto expects the strong momentum to continue with revenue growth estimated between 19% and 20% in 1Q FY21 and in the high teens in FY21.With Palo Alto’s next-gen billings growing at a CAGR of 97% in the FY18 to FY20 period, the company plans to continue investing in its next-gen security solutions and security subscriptions as part of its transformation. On Oct 5, BTIG analyst Gray Powell reiterated a Buy rating and $313 price target for Palo Alto as he believes that the Street’s FY21 forecasts are conservative. The analyst explained that an increased mix shift to Next Generation Security (or NGS) and improved performance in attached services on the traditional firewall business should drive billings growth by over 20% y/y pace in FY21 compared to the Street’s estimate of 15%.The analyst stated “we think investors do not fully appreciate the potential for PANW’s FCF [free cash flow] margins to scale as the company’s NGS business matures over the next few years. As a result, we see multiple catalysts to drive a re-rating in PANW shares over the next 6 – 12 months.” (See PANW stock analysis on TipRanks)The Street echoes Powell’s bullish sentiment with a Strong Buy consensus based on 21 Buys versus 6 Holds and no Sells. The average analyst price target of $297.81 suggests upside potential of 16.3% in the stock. PANW shares have risen 10.7% year-to-date. CrowdStrike Holdings (CRWD)CrowdStrike, which went public in June 2019, has grown rapidly in the cloud cybersecurity space with its AI-powered Falcon platform. Market intelligence firm IDC identified CrowdStrike as the fastest-growing endpoint security software vendor that nearly doubled its market share in the 2018 to 2019 period. Endpoint security focuses on securing various endpoints on a network, including laptops, mobile devices and desktops, from malicious activity.Last month, CrowdStrike posted better-than-expected results for 2Q FY21 (ended Jul. 31) driven by the work-from-home norm and the accelerated transition to cloud-native technologies by organizations amid the pandemic. The company’s 2Q revenue grew 84% Y/Y to $199 million with subscription revenue rising 89% to $184 million and professional services revenue increasing 40% to $14.7 million.It also added 969 net new subscription customers in 2Q and ended the period with 7,230 subscription customers, reflecting a 91% Y/Y growth. Strong top-line growth helped the company in delivering adjusted EPS of $0.03 in 2Q FY21 compared to an adjusted loss per share of $0.18 in 2Q FY20. Coming to outlook, CrowdStrike expects 3Q as well as FY21 revenue growth in the range of 68% to 72%.Last month, CrowdStrike acquired Preempt Security for $96 million. The acquisition will strengthen CrowdStrike’s Falcon platform with Preempt’s conditional access technology and add identity security capabilities to CrowdStrike’s offerings.On Oct. 5, Goldman Sachs analyst Brian Essex upgraded CrowdStrike to Buy from Hold and boosted the price target to $176 from $122. In a research note to investors, Essex stated that CrowdStrike has established itself as a technology leader in the endpoint security market with a “disruptive platform” that has helped to penetrate core markets with a high level of efficiency.The analyst sees “room for upside from here,” with the company’s revenue growing at nearly twice the rate of its “hypergrowth” security software peers. (See CRWD stock analysis on TipRanks)The Street has a Strong Buy consensus for CrowdStrike with 16 Buys, 3 Holds and no Sells. With shares rising by a stellar 196% year-to-date, the average analyst price target of $154.16 indicates a modest upside potential of 4.3% in the months ahead.  Bottom lineBoth CrowdStrike and Palo Alto are poised to capture the growing demand for cloud cybersecurity. CrowdStrike’s revenue growth rate is impressive but the YTD rise in the stock does not indicate a significant upside in the near term. Palo Alto stock appears to be a better pick right now.To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment   More recent articles from Smarter Analyst: * Avient Hikes Dividend By 5% On Strong Business * Alcoa Drops 5% On Bleak Aluminum Outlook * Vertex Sinks 12% On Halt of VX-814 Development; Merrill Lynch Says Buy * United Airlines Posts Heavy Q3 Loss As Covid Crushes Demand,

Palo Alto or CrowdStrike: Which Cybersecurity Stock Is A Safer Bet?Rapid digitization and the work from home trend amid the pandemic has made users and organizations more vulnerable to cyber-attacks. The demand for cybersecurity solutions, especially cloud-based security,  is rising as individuals and enterprises want to protect their information from phishing and malware threats.Indeed, according to Allied Market Research, the global cybersecurity market is forecast to reach $258.99 billion by 2025, reflecting a compounded annual growth rate or CAGR of 11.9% in the 2018 to 2025 period.We will analyze the recent performance of Palo Alto and CrowdStrike and use the TipRanks Stock Comparison tool to see which cybersecurity stock offers a more compelling investment opportunity.  Palo Alto Networks (PANW)Palo Alto is one of the leading names in the cybersecurity market and serves 75,000 customers in more than 150 countries. The company’s transition from its legacy firewall products to cloud cybersecurity solutions and a subscription-based business model has helped in strengthening its position. Palo Alto has three key platforms—Strata (network security platform), Prisma (cloud security solutions) and Cortex (artificial intelligence or AI-based continuous security platform).Acquisitions have been an integral part of Palo Alto’s growth strategy and have helped in expanding its portfolio and presence in key markets. Last month, the company completed the acquisition of The Crypsis Group, a leading incident response, risk management and digital forensics consulting firm for $265 million. The company believes that Crypsis’ security consulting and forensics capabilities will strengthen its threat intelligence Cortex XDR platform.Meanwhile, work-from-home tailwinds and continued strength in the next-gen security solutions (which comprises Cortex and Prisma platforms) helped in driving an 18% Y/Y growth in the company’s revenue to $950.4 million in 4Q FY20 (ended July 31). Billings (a key metric indicating future revenue) grew 32% to $1.4 billion in 4Q. For FY20, billings were up 23% to $4.3 billion and deferred revenue rose 32% to $3.8 billion. Adjusted EPS grew 0.7% to $1.48 in 4Q.Looking ahead, Palo Alto expects the strong momentum to continue with revenue growth estimated between 19% and 20% in 1Q FY21 and in the high teens in FY21.With Palo Alto’s next-gen billings growing at a CAGR of 97% in the FY18 to FY20 period, the company plans to continue investing in its next-gen security solutions and security subscriptions as part of its transformation. On Oct 5, BTIG analyst Gray Powell reiterated a Buy rating and $313 price target for Palo Alto as he believes that the Street’s FY21 forecasts are conservative. The analyst explained that an increased mix shift to Next Generation Security (or NGS) and improved performance in attached services on the traditional firewall business should drive billings growth by over 20% y/y pace in FY21 compared to the Street’s estimate of 15%.The analyst stated “we think investors do not fully appreciate the potential for PANW’s FCF [free cash flow] margins to scale as the company’s NGS business matures over the next few years. As a result, we see multiple catalysts to drive a re-rating in PANW shares over the next 6 – 12 months.” (See PANW stock analysis on TipRanks)The Street echoes Powell’s bullish sentiment with a Strong Buy consensus based on 21 Buys versus 6 Holds and no Sells. The average analyst price target of $297.81 suggests upside potential of 16.3% in the stock. PANW shares have risen 10.7% year-to-date. CrowdStrike Holdings (CRWD)CrowdStrike, which went public in June 2019, has grown rapidly in the cloud cybersecurity space with its AI-powered Falcon platform. Market intelligence firm IDC identified CrowdStrike as the fastest-growing endpoint security software vendor that nearly doubled its market share in the 2018 to 2019 period. Endpoint security focuses on securing various endpoints on a network, including laptops, mobile devices and desktops, from malicious activity.Last month, CrowdStrike posted better-than-expected results for 2Q FY21 (ended Jul. 31) driven by the work-from-home norm and the accelerated transition to cloud-native technologies by organizations amid the pandemic. The company’s 2Q revenue grew 84% Y/Y to $199 million with subscription revenue rising 89% to $184 million and professional services revenue increasing 40% to $14.7 million.It also added 969 net new subscription customers in 2Q and ended the period with 7,230 subscription customers, reflecting a 91% Y/Y growth. Strong top-line growth helped the company in delivering adjusted EPS of $0.03 in 2Q FY21 compared to an adjusted loss per share of $0.18 in 2Q FY20. Coming to outlook, CrowdStrike expects 3Q as well as FY21 revenue growth in the range of 68% to 72%.Last month, CrowdStrike acquired Preempt Security for $96 million. The acquisition will strengthen CrowdStrike’s Falcon platform with Preempt’s conditional access technology and add identity security capabilities to CrowdStrike’s offerings.On Oct. 5, Goldman Sachs analyst Brian Essex upgraded CrowdStrike to Buy from Hold and boosted the price target to $176 from $122. In a research note to investors, Essex stated that CrowdStrike has established itself as a technology leader in the endpoint security market with a “disruptive platform” that has helped to penetrate core markets with a high level of efficiency.The analyst sees “room for upside from here,” with the company’s revenue growing at nearly twice the rate of its “hypergrowth” security software peers. (See CRWD stock analysis on TipRanks)The Street has a Strong Buy consensus for CrowdStrike with 16 Buys, 3 Holds and no Sells. With shares rising by a stellar 196% year-to-date, the average analyst price target of $154.16 indicates a modest upside potential of 4.3% in the months ahead.  Bottom lineBoth CrowdStrike and Palo Alto are poised to capture the growing demand for cloud cybersecurity. CrowdStrike’s revenue growth rate is impressive but the YTD rise in the stock does not indicate a significant upside in the near term. Palo Alto stock appears to be a better pick right now.To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment   More recent articles from Smarter Analyst: * Avient Hikes Dividend By 5% On Strong Business * Alcoa Drops 5% On Bleak Aluminum Outlook * Vertex Sinks 12% On Halt of VX-814 Development; Merrill Lynch Says Buy * United Airlines Posts Heavy Q3 Loss As Covid Crushes Demand

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

168 Robinson Road,
Capital Tower, Singapore 068912
+65 3105 1295

Taiwan

5th Floor, No. 1-8, Section 5, Zhongxiao East Road, Taipei

Hong Kong

R91, 3rd Floor,
Eton Tower, 8 Hysan Ave.
Causeway Bay, Hong Kong
+852 3002 4462

Australia

44 Martin Place, Sydney 2000 Australia
+02 8319 3232

Indonesia

Millennium Centennial Center, 38th Floor, Jl. Jend. Sudirman Kav. 25
Jakarta 12920, Indonesia

Market Coverage