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MKM Partners initiates cybersecurity stock coverage on purchase

MKM Partners initiates cybersecurity stock coverage on purchase

Written by Sam Bogda

MKM Partners analyst started covering cyber security stocks Palo Alto Networks Inc (NASDAQ :), Zscaler (NASDAQ :), fortinet (NASDAQ ๐Ÿ™‚ and CrowdStrike Holdings Inc. (NASDAQ ๐Ÿ™‚ and CyberArk Software (NASDAQ ๐Ÿ™‚ in separate notes on Friday.

Palo Alto Networks shares started with a buy rating and a $250 target price, indicating that it is a diversified cybersecurity company. โ€œThe company has gradually shifted to a software-focused model, with more than 75% of total revenue derived from subscriptions and services,โ€ the analyst said. At the helm since May 2018, CEO Nikesh Arora has been instrumental in moving Palo Alto Networks into a SaaS-based model focused on the next generation of cybersecurity.

Additionally, the Zscaler was launched with a buy rating and a $225 price target. โ€œWe believe Zscaler is an attractive opportunity for long-term growth based on enterprise organizations’ pursuit of (i) a superior Zero Trust platform to integrate functionality to reduce attack surface, equipment proliferation, and IT costs and (ii) to provide seamless protection regardless of location, geography, and office, and home, and/or public WiFi,โ€ the analyst explained. โ€œA growing end market combined with pioneering products and innovation should allow Zscaler to maintain 30% higher growth as well as operating margin and free cash flow expansion well above its peers.โ€

Fortinet shares started with a buy rating and a $70 price target. The analyst stated that their positive thesis is based on favorable market trends identified in the current challenging macro background and that fits with Fortinet’s suite of solutions. The analyst added that the company has many compelling sustainable competitive advantages, including leveraging its core platform (FortiGate) and operating system (ForitOS), its large product portfolio, and a path to reach $10 billion in billing by 2025.

CrowdStrike Holdings started with a buy rating and a price target of $240, with MKM stating that the company has one of the most comprehensive native cloud platforms in the industry. โ€œThe cloud-native architecture has allowed the company to expand its capabilities beyond Endpoint Security with 22 units (up from 10 at the time of the IPO in 2019) addressing a $71 billion market opportunity in fiscal year 24,โ€ the analyst wrote. โ€œThe company plans to reach $5 billion in ARR by fiscal year 26 (this is higher than its previous target of $3 billion that it provided last year). We believe the company belongs in a consortium of its own due to its ability to strike a balance between investment and sustainable underlying growth for More than 55% over the past ten quarters.โ€

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Finally, CyberArk launched with a buy rating and a $190 price target. โ€œWe believe that the company’s transition to a subscription model came before the plan, and the annual recurring revenue (ARR) growth is higher than the company’s overall growth rate, which will eventually enable the acceleration of total revenue growth in the future. The rapid rise in mobile workers, hybrid and multi-cloud adoption, Enterprise digitization increases the enterpriseโ€™s prioritization of identity security, including market-leading Privileged Access Management (PAM) from CyberArk.โ€

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