For Immediate Release
Chicago, IL – May 04, 2017 – 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 Check Point Software Technologies (NASDAQ:CHKP) Ltd (NASDAQ: CHKP – Free Report ), Fortinet, Inc. (NASDAQ: FTNT – Free Report ), FireEye Inc (NASDAQ: FEYE – Free Report ), F5 Networks Inc (NASDAQ:FFIV). (NASDAQ: FFIV – Free Report ) and Proofpoint, Inc. (NASDAQ: PFPT – Free Report ).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Wednesday’s Analyst Blog:
How Did Security Stocks Do This Quarter?
Security spending is expected to grow in leaps and bounds over the next few years.
IDC estimates that cyber-security related services, software and hardware will see around 8.3% CAGR through 2020. This will come off a strong 2016 wherein security services was the strongest category (45% estimates growth), followed by security software (user behavior analytics software being one of the fastest growing sub-segments). The U.S. is currently the largest market for cyber-security, followed by Western Europe.
Gartner says spending on information security will be up 7.6% this year to touch $90 billion and continue growing thereafter to touch $113 billion by 2020. The research firm thinks that spending focus will gradually away from prevention-only approaches to detection and response through the forecast period.
Leading Security Software Vendors
Asia/Pac is the fastest-growing region according to IDC, with Asia/Pac excluding Japan seeing 21% growth in 2016 and Japan 16.9%. In comparison, the U.S. grew just 5.8% and EMEA 6.8%. The security appliance market grew 9.7% in 2016 to $11.5 billion.
The top five vendors account for about half the market with others accounting for the rest. Cisco is the largest vendor according to IDC with a 15.3% share in 2016 but Checkpoint isn’t far behind at 12.8%. Palo Alto with 11.8%, Fortinet with 9.6% and Huawei with 3.2% round out the top five. Cisco and smaller players ceded share while Checkpoint managed to hold its own.
Market Drivers
There are some very strong secular drivers of this market that should lead to continued increase in demand for years to come.
Given the increase in incidences of hacking, ID theft, the increased sophistication of cybercrime and growing privacy concerns, governments across the world are tightening security regulations for companies and banks leading to a security compliance market. Additionally, government procurement of security solutions is also on the rise as technology is closely linked to national security as well.
The second major driver is the ongoing shift of corporate workloads to the cloud termed cloud computing. The shift, which includes public, private and hybrid environments, is becoming highly complex and leading to many different security situations, some of which may be unique to a given circumstance. This is leading to a cross-platform approach to security and the evolution of security-as-a-service.
The shift to cloud computing hasn’t reduced the demand for end-point security because there are still a large number of organizations and individuals with computing devices, many of which are mobile. Some of these also access the information stored in the cloud, thereby representing points of vulnerability. With the advent of IoT and driverless cars, these end points may be expected to rise dramatically, increasing chances of security threats.
Cost is the only major deterrent to security deployment, since organizations need space, personnel and software, which suck up significant resources. But this is actually opening people up to cloud-based software solutions.
Earnings Results
Here are earnings summaries from Checkpoint, Fortinet, FireEye, F5 Networks and Proofpoint:
Check Point Software Technologies Ltd (NASDAQ:CHKP – Free Report )
Check offers policy-based enterprise security and traffic management solutions. Through its patented Stateful Inspection technology, it protects information assets and enhances the performance of enterprise networks.
Checkpoint’s first-quarter results were encouraging, since the company reported revenue and earnings that were both better than the Zacks Consensus Estimates. Two factors drove the strong results: the first was a stronger mix of new products that resulted from customer upgrades and the company’s own bundling policy while the second was the increase in high-value deals (customers with aggregated transaction value over $1 million increased by 16% to 50 customers).
Management said that the company saw triple digit growth across the key focus areas of cloud, mobility and threat prevention. Another encouraging factor was deferred revenue, which grew 20% from the year-ago quarter to around $1.1 billion. (Read more: Check Point Q1 Earnings & Revenues Beat, Guides Well )
Zacks Rank #3 (Hold)
Growth Score: A, Momentum Score: B, VGM Score: B (mainly for investors looking for growth stocks)
Fortinet, Inc. (NASDAQ:FTNT – Free Report )
Fortinet is a provider of network security appliances and Unified Threat Management (UTM) network security solutions to enterprises, service providers and government entities worldwide. Its solutions integrate firewall, VPN, antivirus, intrusion prevention, Web filtering, antispam and WAN acceleration and incorporate both hardware and software elements. Its flagship UTM solution consists of FortiGate appliance product line and FortiGuard security subscription services.
Fortinet also reported strong first-quarter results, with revenue and earnings surpassing both management expectations and Zacks Consensus Estimates. Both products and services drove the 19.7% increase in revenue and solid earnings growth. The strength was mostly at enterprise customers in North America.
The company is also seeing growth in deal sizes with the number of deals over $100,000 growing 20%, deals over $250,000 growing 15% and deals over $500,000 growing 31%. Also encouraging was the deferred revenue, which grew 31% to $1.10 billion.
The company also announced that leading tech companies like Cisco, Hewlett Packard, Nuage Networks from Nokia (HE:NOKIA) joined its Fortinet Security Fabric-Ready ecosystem. Read more: Fortinet Q1 Earnings Beat, Revenue Growth Slows Down
Zacks Rank #2 (Buy)
Growth Score: A, Momentum Score: A, VGM Score: B (mainly for investors looking for growth stocks)
FireEye Inc (NASDAQ:FEYE – Free Report )
FireEye offers a security platform incorporating web security, email security, file security and malware analysis for enterprises and governments. It sells both products and services through distributors, resellers and strategic partners primarily in the United States, the Asia Pacific, Japan, Europe, the Middle East and Africa.
FireEye’s second-quarter results were better than the Zacks Consensus Estimates. The company’s turnaround efforts such as product refreshes, acquisitions and cost optimization appear to be paying off because the quarterly loss is significantly lower on slightly higher revenue. The company revealed that a more strengthened leadership team, improved sales execution, enhanced relationship with channel partners and product launches, including Helix and HX drove its performance. Read more: FireEye Soars on Narrower Q1 Loss & Solid Outlook
Zacks Rank #3 (Hold)
Growth Score: A, Momentum Score: A, VGM Score: B (mainly for investors looking for growth stocks)
F5 Networks Inc. (NASDAQ:FFIV – Free Report )
F5 Networks offers integrated Internet traffic and content management solutions to improve the availability and performance of mission-critical Internet-based servers and applications. The company's products monitor and manage local and geographically dispersed servers and intelligently direct traffic to the server best able to handle a user's request. The products therefore help prevent system failure and provide timely responses to user requests and data flow.
The company’s revenue and earnings grew from the year-ago quarter but were below the respective Zacks Consensus Estimates. Asia/Pac was the strongest geography, growing 16%. Enterprise, Service providers and Government (including 4% from the U.S. federal) accounted for 65%, 22% and 13% of total revenue, respectively. Read more: F5 Networks Q2 Earnings & Revenues Miss Estimates
Zacks Rank #3 (Hold)
Value Score: B, Growth Score: B, VGM Score: B (for both value and growth investors)
Proofpoint, Inc. (NASDAQ:PFPT – Free Report )
Proofpoint, Inc. is a leading security-as-a-service provider that focuses on cloud-based solutions for threat protection, compliance, archiving & governance, and secure communications. Organizations around the world depend on Proofpoint's expertise, patented technologies, and on-demand delivery system to protect against phishing, malware and spam, safeguard privacy, encrypt sensitive information, and archive and govern messages and critical enterprise information.
Proofpoint saw revenues and earnings grow from the year-ago quarter, but while revenue was ahead of the Zacks Consensus Estimate, earnings fell short. Management attributed the results to continued demand for advanced threat solutions, win rates, new and add-on activity, traction in the emerging products category and a renewal rate that continues to exceed 90%.
The shift to Microsoft’s Office 365 is proving beneficial for the company as is its partnership with Intel (NASDAQ:INTC) McAfee on the one hand and Palo Alto Networks, CyberArk, Imperva and Splunk on the other. The McAfee deal will help the company sell its email security solution into the McAfee user base and management thinks further product upsell opportunity will also be significant.
Zacks Rank #3 (Hold)
Growth Score: A, Momentum Score: A, VGM Score: B (mainly for investors looking for growth stocks)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free .
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Check Point Software Technologies Ltd. (CHKP): Free Stock Analysis Report
Fortinet, Inc. (FTNT): Free Stock Analysis Report
FireEye, Inc. (FEYE): Free Stock Analysis Report
F5 Networks, Inc. (FFIV): Free Stock Analysis Report
Proofpoint, Inc. (PFPT): Free Stock Analysis Report
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