Written by Sam Bogda
In separate research notes on Thursday, Jefferies analyst began covering electronic stocks Zscaler (NASDAQ :), Palo Alto Networks (NASDAQ :), Okta, Inc. (NASDAQ :), and fortinet (NASDAQ:).
He started Zscaler’s coverage with a Hold rating and $200 per target share, saying the company is in good standing, but that is reflected in its valuation.
“Zscaler is a leading network security company, which is in the early stages of monetizing its site with its unique Internet architecture while meeting demanding customer demand for integrating security functions,” the analyst wrote. “ZS has cleverly capitalized on that position with its GTM prowess, resulting in significant growth and equity gains. However, it looks like an affordable 15x EV/CY23E revision rate, with a rally driven by the rally we think is likely to be more muted. from previous years.”
The analyst assumed coverage of Palo Alto Networks, maintaining a buy rating and setting a target price of $220.
“PANW’s recent results appear to be immune to macros as they accelerate billing growth 3 Qs in a row. PANW’s combination of cloud-benefiting (unified spend) comprehensive platform plus prudent FY23 guidance creates an attractive setup for our favorite online platform with stock trading at 8x EV/CY23E rev – Attractive for assets with 20% + sales growth rate/OPM LT.
Okta started with a buy rating and a price target of $90 per share, which the analyst said is a great buying opportunity.
“A myriad of issues (electronic accidents, macros, sales integration) have plagued Okta this year, resulting in an overcorrection for the stock (-73% ytd; 4x EV/CY23E rev). This, in our opinion, created a point Attractive entry for a leading cyber asset. While we’re not discounting the amount of work in front of the company (that will likely take a few quarters), we’re highlighting a great product, along with a large, unpenetrated market,” the analyst wrote.
Finally, at Fortinet, the analyst kicked off its buy rating and $65 price target, saying the company represents a rare combination of growth and GAAP profitability as it “continues to implement its vision of converged security and networking.”
“Companies will rely on a hybrid environment for the foreseeable future and the combined internet/networking market is huge, making sustainable and efficient growth achievable. The stock is trading at a rate of 22x EV/CY23E FCF against a large average capitalization of 25x which we believe provides downside protection to supplement earnings stock,” the analyst said.