Cyber attacks have been rising amid growing digitization and geopolitical tensions. Moreover, the sophistication of these attacks has increased, with cyber criminals leveraging advanced technologies and artificial intelligence (AI). As per Check Point Research, cyber attacks rose 30% year-over-year to 1,636 attacks per organization per week globally in Q2 2024. Given this favorable demand backdrop, we used TipRanks’ Stock Comparison Tool to place Fortinet (FTNT), CrowdStrike (CRWD), and Palo Alto Networks (PANW) against each other to find the best cybersecurity stock.
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Fortinet (NASDAQ:FTNT)
Shares of Fortinet have jumped 31% year-to-date, supported by the cybersecurity company’s robust results for the second quarter of 2024 and upgraded full-year outlook. The company’s Q2 revenue increased about 11% year-over-year to $1.43 billion, as a 20% rise in Service revenue more than offset the 4.4% decline in Product revenue.
Remarkably, Q2 adjusted earnings per share (EPS) surged 50% to $0.57 due to higher revenue and an 820 basis points expansion in operating margin. Such a massive improvement in Fortinet’s operating margin was driven by increased gross margin and cost efficiencies.
While there were some concerns about Q2 billings remaining flat year-over-year, management expressed confidence in the prospects ahead. The company intends to invest in the rapidly growing Unified SASE (secure access service edge) and Security Operations businesses, while winning market share in Secure Networking.
Is FTNT a Good Buy?
Following the Q2 results, Mizuho analyst Gregg Moskowitz reiterated a Hold rating on Fortinet stock and raised the price target to $68 from $66. The analyst noted the company’s upbeat results and solid margins.
While Moskowitz thinks that the company is well positioned within the network security space, he is concerned about the intense rivalry in the SASE and SecOps markets.
With nine Buys and 20 Holds, Fortinet has a Moderate Buy consensus rating on TipRanks. The average FTNT stock price target of $71.35 implies a possible downside of 7% from current levels.
CrowdStrike (NASDAQ:CRWD)
CrowdStrike stock took a major hit last month when a faulty update to the company’s Falcon sensor software impacted millions of Microsoft (MSFT) Windows devices and caused a massive outage. The cloud-native cybersecurity company is now facing class action lawsuits and also legal action by Delta Air Lines (DAL).
Despite all this chaos, CrowdStrike reported better-than-expected results for the second quarter of Fiscal 2025 (ended July 31, 2024). Revenue grew 32% to $963.9 million, while adjusted EPS surged over 40% to $1.04.
However, CrowdStrike lowered its full-year guidance to reflect the impact of the global outage. Management cautioned that it expects to witness extended sales cycles for both new and existing customers and additional deal scrutiny. Despite these near-term pressures, the company is confident about its long-term potential, backed by a strong customer retention rate. It continues to target $10 billion in ending ARR (annual recurring revenue) by the end of Fiscal 2031.
What Is the Price Target for CRWD Stock?
On August 30, HSBC analyst Stephen Bersey upgraded CrowdStrike stock to Buy from Hold and raised the price target to $339 from $302. The analyst contends that the unfavorable outage news is behind us, given that the financial impact of the incident is known now. He believes that CRWD’s long-term growth story remains intact, with the company having exposure to some of the fastest-growing markets in the security market.
Bersey also highlighted that despite recent headwinds, the company’s ARR continues to rise, mainly in its hyper-growth business divisions.
CrowdStrike scores a Strong Buy consensus rating based on 34 Buys, five Holds, and one Sell recommendation. The average CRWD stock price target of $329.36 implies about 19% upside potential. Shares are up 9% so far this year.
Palo Alto Networks (NASDAQ:PANW)
Palo Alto offers customers AI-powered solutions in network security, cloud security, and security operations. Earlier this year, PANW stock plunged significantly over concerns about the company’s pivot to its new “platformization” strategy. The company said that under the new strategy, it would use incentives and promotions to drive the purchase of bundled products and services by its customers instead of standalone product purchases.
Last month, the company addressed investors’ concerns about its strategic shift by delivering upbeat results for the fourth quarter of Fiscal 2024. Revenue grew 12% to $2.2 billion in Q4 FY24 (ended July 31, 2024), while adjusted EPS increased about 5% to $1.51. Moreover, ARR for the next-generation security (NGS) platform surged 43% to $4.2 billion.
Palo Alto attributed its better-than-anticipated performance to the implementation of its platformization strategy. The company expects this strategy to be a major driver in achieving its target of $15 billion in NGS ARR in FY30.
Is PANW a Good Stock to Buy?
In reaction to the Q4 results, Argus analyst Joseph Bonner raised the price target for Palo Alto stock to $400 from $348 and reaffirmed a Buy rating. The analyst noted that the company is witnessing traction in its new go-to-market strategy. He added that while the new strategy would result in slower near-term revenue growth, it is expected to drive revenue acceleration over time.
Wall Street has a Strong Buy consensus rating on Palo Alto stock, backed by 31 Buys and six Holds. The average PANW stock price target of $388.14 indicates 7% upside potential. Shares are up 23% year-to-date.
Conclusion
Wall Street is highly bullish on CrowdStrike and Palo Alto stocks and cautiously optimistic about Fortinet. They see a higher upside potential in CRWD stock than in the stocks of the other two cybersecurity players.
Despite the impact of the recent outage on CrowdStrike’s business in the near term, analysts remain confident about the demand for the company’s products in the years ahead.
