The increased adoption of cloud computing and connected devices has created a wave of threats from cybercriminals around the world. The cybersecurity industry has been expanding at a healthy pace for many years, as the pace of cyber attacks intensifies and cyber threats become more sophisticated.
Gartner predicts this growth will continue Global cybersecurity spending This year, it is expected to increase by 14.3% to $215 billion. Furthermore, the global cybersecurity market continues to expand at a he CAGR of 13.8%, Revenue $424.97 billion By 2030.
Against this backdrop, top cybersecurity stocks like CrowdStrike Holdings (CRWD) and Palo Alto Networks (PANW) are attracting attention from investors looking to capitalize on the industry's tailwinds.
CRWD has risen about 28% since the beginning of the year and impressed investors with fourth-quarter results that beat Wall Street expectations and provided solid guidance. Meanwhile, Palo Alto Networks lowered its fiscal year 2025 outlook, disappointing investors and analysts. After U.S. Representative Nancy Pelosi revealed on February 26 that she had purchased $1.25 million in PANW call options, PANW stock briefly rose, but the stock price fell. It has reversed some of those gains and is now down 2.5% year-to-date.
But which of these cybersecurity stocks is more likely to rise this year? Let's take a closer look.
Case study of CrowdStrike Holdings stock
CrowdStrike Holdings, Inc. (CRWD), headquartered in Austin, Texas, is the world's leading cybersecurity company revolutionizing security with its advanced cloud-native platform. Powered by the CrowdStrike Falcon platform Artificial intelligence (AI) and CrowdStrike Security Cloud ensure real-time attack detection, automated protection, and rapid deployment, reducing complexity and delivering immediate value. The current market capitalization is $79.76 billion.
CRWD stock has increased 156.7% over the past 52 weeks, significantly outpacing the S&P 500 Index's ($SPX) gain of 32.3%.
The company's stock is currently trading at a forward P/E ratio of 288.33 times and sales of 25.88 times, representing a significant premium compared to peers PANW and Workday (WDAY). PANW trades at 102.23x estimated earnings and 13.35x sales, while Workday's valuation multiples are 145.75x and 9.83x, respectively.
CrowdStrike beats Wall Street expectations
CrowdStrike's positive earnings reaction has been the primary driver of its positive price performance year-to-date. The company's fourth-quarter sales rose 33% year-over-year to $845.3 million, beating consensus estimates of $840 million. Annual recurring revenue increased to $281.9 million.
The company's non-GAAP operating income jumped to $213.1 million, and non-GAAP net income was $236.21 million, or $0.95 per share, compared to Wall Street's estimate of $0.82 per share. It has more than doubled.
For fiscal 2025, CrowdStrike is expected to see strong demand, with management forecasting sales to be in the range of $3.92 billion to $3.98 billion, an increase of approximately 29.9% next year. indicates an increase. Non-GAAP operating income is estimated to be between $863.6 million and $913 million, while his non-GAAP EPS is expected to be in the range of $3.77 to $3.97.
CRWD has an overall consensus rating of Strong Buy. Of the 40 analysts covering CRWD, 35 recommend a “strong buy,” three recommend a “moderate buy,” and two recommend a “hold.”
shares received Multiple analysts raise their price targets Following the well-received financial results report, Analyst average price target CrowdStrike’s price is currently $389.87, indicating an 18.6% upside potential. The high price target of $435 suggests 32.3% upside potential.
For Palo Alto Networks stock
Another cybersecurity veteran, Santa Clara-based Palo Alto Networks, Inc. (PANW) is known for its comprehensive security products, including firewalls, cloud security, URL filtering, and advanced threat protection. Its diverse product portfolio contributes to its revenue streams, and it boasts a market capitalization of $93.74 billion.
PANW stock It has returned 55.9% over the past 52 weeks.
Palo Alto Networks is valued at 102.23 times expected earnings and 13.35 times sales, making it a cheaper price than CRWD. But PANW's growth forecast for the year ahead is also far less optimistic than its cybersecurity rivals.
Palo Alto Networks slides forecast for revenue decline
Palo Alto's second-quarter fiscal revenue was $1.98 billion, exceeding the consensus estimate of $1.97 billion, and earnings were approximately 1.5 times higher at $504.7 billion ($1.46 per share) than Wall Street expected. It exceeded $1.30. The company also raised its full-year 2024 non-GAAP EPS guidance to a range of $5.45 to $5.55, up from previous guidance of $5.40 to $5.53.
despite this, Palo Alto Networks stock price plummets The move comes after the company lowered its full-year outlook for revenue and billings, raising concerns about customers' IT spending. The company expects sales to be in the range of $7.95 billion to $8 billion, which would be down from last year. Scope of early instruction $8.15 billion and $8.20 billion. The bill was lowered to a range of $10.1 billion to $10.2 billion.
CEO Nikesh Arora The company said it expects the guidance reduction is due to a strategic shift aimed at accelerating growth, migrating and integrating platforms, and reinvigorating its AI leadership.difficult customer” due to the change. According to Wells Fargo analysts, the updated billing forecast primarily reflects Defense Information Systems Agency's $1.86 billion Thunderdome project.
Stocks recouped some of their post-earnings losses following news of: Nancy Pelosi reveals she bought call options on PANWbut the stock is still down more than 21% from its pre-earnings closing price.
at least 12 analysts lowered their price targets Palo Alto's stock received a strong post-earnings rating, and PANW currently has a consensus rating of “Moderate Buy” on Wall Street, downgraded from “Strong Buy” a month ago. Of the 40 analysts covering PANW, 27 recommend a “strong buy,” 2 recommend a “moderate buy,” and 11 recommend a “hold.”
of Analyst average price target Palo Alto's price is $333.55, indicating a potential upside of 15.9% from current levels. The high price target of $420 implies an upside potential of 44.8% over the next 12 months.
CRWD vs. PANW: Which stock is better to buy now?
Both stocks are priced at a premium right now, but CRWD looks like a better buy than PANW given its solid earnings history and solid guidance for the year ahead. Conversely, PANW's full-year forecast provides far less clarity and visibility for investors, despite Pelosi's clear vote of confidence.
Additionally, CrowdStrike stock appears to have more upside potential than PANW at current levels, as analysts are rushing to raise their price targets.
On the date of publication, Sristi Suman Jayaswal did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
