By Senad Karaahmetovic
An Atlantic Equities analyst initiated research coverage on the cybersecurity sector. The analyst sees robust demand for platform solutions, led by "the complexity associated with the shift to cloud deployments and the lack of available cybersecurity professionals."
The analyst initiated Fortinet (NASDAQ:FTNT) at Overweight, while Palo Alto Networks (NASDAQ:PANW), and CrowdStrike (CRWD) both started at Neutral.
"We see all three benefiting from key trends within the cybersecurity sector, commanding leading market share positions in their respective markets and are expected to deliver superior financial performance. Demand for cybersecurity software is underpinned by the last few years' exponential increase in the cost of a cyber security breach, with ransomware damages having reportedly increased 57x from $325m to $20bn during CY15-21," the analyst said in a client note.
FTNT stock has a $76 per share price target at Atlantic. The company, which is the second largest cyber security player, is seen as a "market share leader in firewall appliances with a clear cost and performance advantage as its solutions provide 5-9x more compute than similarly priced products."
Despite the analyst being very positive on PANW (price target at $495), he sees an elevated valuation as a key reason why he started at Neutral.
"We don't see any upside in the shares, especially considering the relatively high share-based compensation," the analyst added.
Finally, CrowdStrike has a $200 per share price target at Atlantic.