With the world becoming more evolved through technological advancements, the demand for cybersecurity solutions is also surging. These cyberattacks have become frequent, making protecting sensitive information a more critical priority than ever.
Given this landscape, investors looking to tap into this dynamic sector might consider watching cybersecurity stocks such as CrowdStrike Holdings, Inc. (CRWD), Palo Alto Networks, Inc. (PANW), and Fortinet, Inc. (FTNT). These companies adopt advanced AI tools to automate threat detection and enhance their defense systems.
Companies and governments invest heavily in protecting sensitive information from data breaches and ransomware incidents. For fiscal year 2025, the U.S. government has proposed $13 billion in funding across civilian departments and agencies, including an enhanced budget of $3 billion for the Cybersecurity and Infrastructure Security Agency (CISA), a $103 million increase from the previous year.
Moreover, cyberattacks have only increased this year, with 41% of small businesses experiencing a cyber threat. The region most affected by ransomware attacks is the United States, which accounts for 59% of them. This has led to a surge in cybersecurity solutions as strengthening defenses has become more crucial than ever.
Therefore, the global cybersecurity market is expected to reach $562.72 by 2032, exhibiting a CAGR of 14.3%.
Cybersecurity firms are developing solutions to protect mobile devices, IoT systems, and enterprise networks from advanced threats, making this industry attractive for long-term investors.
With that in mind, let’s analyze the fundamentals of the above-mentioned three Software - Security stocks, beginning with #3.
Stock #3: CrowdStrike Holdings, Inc. (CRWD)
CRWD is a global cybersecurity company that provides cloud-delivered protection of endpoints, cloud workloads, identity, and data. The company’s Falcon platform is designed for cybersecurity consolidation and is purpose-built to stop breaches. The platforms collect and integrate data from across the enterprise, including endpoints, cloud workloads, identities, and third-party sources.
On October 23, CRWD announced that it collaborated with Omnissa, a leading digital work platform company, to deliver real-time threat detection and automated remediation for Virtual Desktop Infrastructure (VDI) and physical desktop environments.
This strategic alliance of integrating CRWD’s Falcon in the Omnissa platform will empower interconnected threat detection and remediation for increased cyber resiliency in virtual environments.
In the same week, CRWD and FTNT announced a strategic partnership to unify AI-native endpoint security and next-generation firewall protection, allowing customers and partners to gain flexibility, visibility, and security across networks, applications, and endpoints to stop breaches. This partnership will unify CRWD’s Falcon cybersecurity platform with FTNT’s next-generation firewalls.
CRWD’s revenue for the second quarter (ended July 31, 2024) increased 31.7% year-over-year to $963.87 million. The company reported a gross profit of $726.47 million, indicating a 32.4% growth from the prior year quarter. CRWD’s non-GAAP net income came in at $260.76 million and $1.04 per share, up 44.9% and 40.5% year-over-year, respectively.
For the full year 2025, CRWD expects total revenue to be between $3.89 billion and $3.90 billion and non-GAAP income from operations to range from $774.70 million to $783.90 million. The company also expects non-GAAP net income to fall between $908.80 million and $918 million, or $3.61 and $3.65 per share.
Analysts expect CRWD’s revenue for the third quarter (ending October 2024) to increase 25.1% year-over-year to $983.05 million. However, the consensus EPS estimate of $0.81 for the same period indicates a 1.4% year-over-year decline. For the fiscal year ending January 2025, Street expects CRWD’s revenue and EPS to grow 27.7% and 17.9% from the prior year to $3.90 billion and $3.64, respectively.
Over the past year, the stock has surged 79.9%, closing the last trading session at $310.94.
CRWD’s stance is apparent in its POWR Ratings. The stock has an A grade for Growth and a B for Quality. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 21 stocks in the Software - Security industry, it is ranked #17. Click here to see the additional CRWD ratings (Value, Momentum, Stability, and Sentiment).
Stock #2: Palo Alto Networks, Inc. (PANW)
PANW is a provider of cybersecurity solutions. The company's platforms and services are designed to secure 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 introduced new OT security solutions powered by Precision AI to protect OT remote operations, mitigate risk for critical OT assets, and extend security into harsh industrial environments. This new feature also helps customers simplify operations and increase efficiency with organizations to address vulnerabilities in real time without disruptive downtime.
In the same month, PANW announced the expansion of its strategic alliance with Deloitte in the EMEA and JAPAC regions. Deloitte's agreement to adopt PANW’s cloud and network security platforms offers mutual customers a unified platform and helps them achieve better cybersecurity solutions.
During the fourth quarter that ended on July 31, 2024, PANW’s revenue increased 12.1% year-over-year to $2.19 billion. The company’s gross profit came in at $1.62 billion reflecting an increase of 11.7% from the prior year quarter. In addition, its non-GAAP net income amounted to $522.20 million and $ $1.51 per share, reflecting an increase of 8.2% and 4.9% year-over-year, respectively.
Looking ahead, PANW anticipates first-quarter revenue for fiscal year 2025 to fall between $2.10 billion and $2.13 billion, reflecting a year-over-year growth of 12% to 13%. The company also projects non-GAAP earnings per share to range from $1.47 to $1.49, marking an annual increase of 7% to 8%.
The consensus revenue estimate of $2.12 billion for the fiscal first quarter (ending October 2024) represents a 12.9% increase year-over-year. The consensus EPS estimate of $1.48 for the same quarter indicates a 6.9% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 53% over the past year and 24.5% over the past six months to close the last trading session at $365.39.
PANW’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Sentiment and Quality. It is ranked #12 out of 21 stocks in the same industry.
Beyond what is stated above, we’ve also rated PANW for Growth, Value, Momentum, and Stability. Get all PANW’s ratings here.
Stock #1: Fortinet, Inc. (FTNT)
FTNT provides cybersecurity and convergence of networking and security solutions worldwide. The company offers secure networking solutions focusing on the convergence of networking and security, network firewall solutions, wireless LAN solutions, and secure connectivity solutions.
On October 8, FTNT announced the expansion of its cloud-native application, Lacework FortiCNAPP, a unified, AI-driven platform to secure everything from code to cloud from a single vendor. This expansion will strengthen the company’s position in the market as Lacework FortiCNAPP maximizes cloud security and helps detect and investigate threats.
On September 10, FTNT announced the opening of an Innovation Hub in Chicago. This new facility enhances collaboration with customers, partners, employees, and other stakeholders as it expands FTNT’s cloud Point of Presence, its research and development, and also, its training facility. This opening should help expand the company’s global cloud footprint.
For the second quarter of 2024, which ended on June 30, FTNT's total revenues increased 10.9% year-over-year to $1.43 billion. Its total gross profit rose 16.3% from the year-ago value to $1.16 billion.
Its non-GAAP operating income stood at $503.60 million, up 44.7% year-over-year, while its non-GAAP net income amounted to $439.90 million, representing an increase of 46.4% from the last year. Also, the company’s non-GAAP EPS for the quarter increased 50% year-over-year to $0.57.
According to the company’s guidance, FTNT forecasts fiscal year 2024 revenue to range from $5.80 billion to $5.90 billion, with billings between $6.40 billion and $6.60 billion. In addition, it anticipates its non-GAAP gross margin to fall between 79% and 80% and non-GAAP net income per share in the range of $2.00 and $2.04.
Street expects FTNT’s revenue for the fiscal third quarter (ended September 2024) to increase 10.9% year-over-year to $1.48 billion. Moreover, its EPS estimate of $0.52 for the same period indicates a 27.1% year-over-year growth. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
FTNT shares have surged 41.1% over the past year and 38.3% over the past three months to close the last trading session at $79.37.
FTNT’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
FTNT has an A grade for Quality and B for Sentiment. It is ranked #6 in the Software - Security industry. Click here to see the other ratings of FTNT for Growth, Value, Momentum, and Stability.
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PANW shares were trading at $362.22 per share on Wednesday afternoon, down $3.17 (-0.87%). Year-to-date, PANW has gained 22.84%, versus a 23.44% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
