As digital threats rise, cybersecurity is becoming more essential than ever. In this dynamic environment, investors might find it prudent to monitor quality cybersecurity stocks like Check Point Software Technologies Ltd. (CHKP), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR).
Cybersecurity is vital for both businesses and national security, as securing cloud infrastructure and IT systems is essential for daily operations and defense against cyber threats. According to Statista, the global cybersecurity market is expected to reach $185.70 billion, exhibiting a CAGR of 7.9%.
The recent software malfunction at CrowdStrike Holdings, Inc. (CRWD) caused a widespread tech outage, leaving millions of Windows users locked out of their devices. This incident underscores the growing demand for more sophisticated cybersecurity measures. The increasing threat of cybercrime has made governments and organizations invest billions in beefing up digital security.
As a result, the Biden-Harris administration has proposed $13 billion in cybersecurity funding across civilian departments and agencies. The fiscal 2025 proposal also directs $3 billion to the Cybersecurity and Infrastructure Security Agency (CISA), reflecting a $103 million increase over its current budget.
With that in mind, let’s analyze the fundamentals of the above-mentioned three Software – Security stocks, beginning with #3.
Stock #3: Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP develops, markets, and supports a range of products and services for IT security globally. The company offers a multilevel security architecture, cloud, network, mobile devices, endpoint information, and IOT solutions.
On October 1, CHKP announced the completion of its acquisition of Cyberint Technologies Ltd., a highly innovative provider of external risk management solutions. This acquisition is likely to boost the company’s competitive edge and improve stock performance.
On September 2, CHKP announced the release of its innovative Portal designed for managed security service providers (MSSPs) and distributors. The newly unveiled platform significantly simplifies service delivery and increases the ease of doing business with the company.
In the fiscal second quarter that ended June 30, 2024, CHKP’s total revenues stood at $627.40 million, up 6.6% year-over-year. The company’s non-GAAP net income and earnings per share increased 3.2% and 8.5% over the prior-year quarter to $246 million and $2.17, respectively.
Analysts expect Check Point’s EPS and revenue for the quarter ended September 30, 2024, to increase 8.8% and 6.5% year-over-year to $2.25 and $635.12 million, respectively. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
CHKP shares have surged 52.5% and 34.4% year-to-date over the past year to close the last trading session at $205.28.
CHKP’s POWR Ratings reflects its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CHKP has an A grade in Quality and is ranked #5 out of 22 stocks in the Software Security industry.
Click here to access additional CHKP ratings for Stability, Growth, Sentiment, Value, and Momentum.
Stock #2: Trend Micro Incorporated (TMICY)
Based in Tokyo, Japan, TMICY specializes in development and sale of computer security products and services. The company’s product offering includes personal computer (PC) clients, local area network (LAN) servers, Internet servers, and more.
On August 7, the company launched a new solution, which was included in TMICY’s Vision One™ Sovereign Private Cloud — powered by NVIDIA Corporation (NVDA) NIM microservices, part of the NVDA AI Enterprise software platform. This would allow organizations to boost the potential of the AI era while maintaining business resilience.
On August 6, TMICY announced its partnership with GMI Cloud, a leading AI-native GPU cloud provider known for its vertically integrated platform optimized for Artificial Intelligence (AI) and Machine Learning (ML) workloads.
TMICY’s net sales for the six months that ended June 30, 2024, stood at ¥134.53 billion ($913.56 million), up 12.5% over the prior-year quarter. Its operating income increased 34.4% year-over-year to ¥24.44 billion ($165.93 million). In addition, net income attributable to owners of the parent rose 50.9% from the prior year quarter to ¥17.90 billion ($121.52 million).
Analysts expect TMICY’s revenue for the fiscal third quarter (ending September 2024) to increase 9.9% year-over-year to $465.67 million. Its EPS for the same quarter is expected to register a robust growth of 907.1% from the previous year’s period, settling at $0.50. Plus, the company has surpassed its consensus revenue estimates in three of four trailing quarters.
TMICY’s stock has gained 44.8% over the past year and 17.9% over the past three months, closing the last trading session at $53.63.
It’s no surprise that TMICY has an overall rating of A, equating to a Strong Buy in our POWR Ratings system.
The stock also has a B grade for Stability and Quality. It is ranked #2 out of 22 stocks in the same industry.
Beyond what is stated above, we’ve also rated TMICY for Growth, Value, Momentum, and Sentiment. Get all TMICY ratings here.
Stock #1: Radware Ltd. (RDWR)
Headquartered in Tel Aviv, Israel, RDWR and its subsidiaries develop, manufacture, and market cybersecurity and application delivery solutions for cloud, on-premises, and software-defined data centers worldwide. The company operates in two segments: Radware’s Core Business and The Hawks’ Business.
On October 3, 2024, RDWR introduced a new Threat Intelligence Service that is aimed at enhancing threat detection for security operation teams.
During the fiscal second quarter that ended June 30, 2024, RDWR’s revenues rose 2.5% year-over-year to $67.28 million. Its non-GAAP gross profit increased 2.4% year-over-year to $55.29 million. Its non-GAAP operating income grew 224.9% from the year-ago value to $6.28 million. In addition, the company’s non-GAAP net income and EPS came in at $8.79 million and $0.20, up 94% and 100% over the prior-year quarter, respectively.
For the quarter ended June 30, 2024, RDWR’s revenue is expected to increase 11% year-over-year to $68.36 million. Its EPS for the same quarter is expected to increase 183.2% year-over-year to $0.20. It surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 45.9% to close the last trading session at $23.26.
RDWR’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Growth and Sentiment. It is ranked #1 in the same industry.
To see RDWR’s Value, Momentum, and Stability ratings, click here.
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CHKP shares were unchanged in premarket trading Tuesday. Year-to-date, CHKP has gained 34.35%, versus a 23.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Cybersecurity Stocks to Buy as Digital Threats Multiply StockNews.com
