Due to increasing cyber-attacks with enterprises rapidly digitalizing their operations and migrating to cloud platforms, the cybersecurity industry has benefited significantly over the past year. However, considering the macroeconomic headwinds, it could be worth watching prominent cybersecurity stocks CyberArk Software (CYBR), Rapid7 (RPD), Check Point Software Technologies (CHKP), Qualys (QLYS), and Palo Alto Networks (PANW) ahead of their upcoming earnings releases. Read on to learn what Wall Street expects…

This year, the stock market has witnessed a massive sell-off due to investors’ concerns over surging inflation, rising interest rates, and a potential recession. Of course, the technology sector has significantly declined from its highs last year. The tech-heavy Nasdaq Composite has lost 28.8% year-to-date.

However, one of the technology segments, the cybersecurity industry, has survived the market turmoil relatively well thanks to the surging demand for cybersecurity solutions to remain protected from increasing cyber-attacks. Since the onset of the COVID-19 pandemic, accelerated digital transformation and cloud migration have significantly exposed enterprises to cyber-attacks.

Moreover, the Russia-Ukraine war has exposed Western countries to increased cyber-attacks and online security risks, thereby increasing opportunities for cybersecurity companies.

Given this backdrop, it would be wise to add cybersecurity stocks CyberArk Software Ltd. (CYBR), Rapid7, Inc. (RPD), Check Point Software Technologies Ltd. (CHKP), Qualys, Inc. (QLYS), and Palo Alto Networks, Inc. (PANW) to your watchlist ahead of their upcoming earnings releases.

CyberArk Software Ltd. (CYBR)

CYBR is a provider of IT security solutions that protects organizations from cyber-attacks. Its software solutions are focused on protecting privileged accounts from cyber-attacks.

On May 12, 2022, CYBR launched CyberArk Ventures, a $30 million fund to fuel innovative cybersecurity technologies. It has aligned with renowned investors: Venrock, YL Ventures, Team8 Capital, and Merlin Ventures to fund cybersecurity start-ups.

CYBR’s net revenues decreased 11.6% year-over-year to $112.76 billion for the first quarter ended March 31, 2022. The company’s gross profit declined 7.7% from its year-ago value to $91.83 million, while its net loss narrowed 59.8% year-over-year to $15.19 billion. Also, its loss per share came in at $0.39, representing a decrease of 58.5% year-over-year.

Analysts expect CYBR’s EPS for the June 30, 2022 quarter to decline to a negative $0.30 from a positive $0.01 a year ago. Its revenue for the current quarter is expected to increase 18.4% year-over-year to $138.82 million. It missed the Street EPS estimates in one of the trailing four quarters. The stock has lost 25.6% year-to-date to close the last trading session at $128.86.

CYBR’s POWR Ratings reflect its poor prospects. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has a D grade for Value and Momentum. Within the Software - Security industry, it is ranked #15 out of 29 stocks. Click here to see the other ratings of CYBR for Growth, Stability, Sentiment, and Quality.

Rapid7, Inc. (RPD)

RPD offers cyber security solutions through a cloud-native insight platform that enables customers to create and manage analytics-driven cyber security risk management programs. It offers its products through term or perpetual software licenses, cloud-based subscriptions, and managed services.

RPD’s total revenue increased 34% year-over-year to $157.38 million for its fiscal first quarter ended March 31, 2022. However, its adjusted EBITDA loss came in at $1.17 million compared to a $5.76 million loss in the year-ago period, while its non-GAAP net loss grew 549.8% year-over-year to $9.26 million.

Also, its non-GAAP loss per share came in at $0.16, representing a 433.3% year-over-year increase.

For the quarter ended June 30, 2022, analysts expect RPD’s loss per share to amount to $0.04 versus earnings of $0.03 a year ago. The company’s revenue for the quarter is expected to increase 29.8% year-over-year to $164.09 million. The stock has declined 41.6% year-to-date to close the last trading session at $68.74.

RPD’s POWR Ratings are consistent with this bleak outlook. It has an overall D rating, which translates to Sell in our proprietary rating system. The stock also has a D grade for Momentum and Sentiment. It is ranked #22 in the Software - Security industry.

To see the additional POWR Ratings for Growth, Value, Stability, and Quality for RPD, click here.

Check Point Software Technologies Ltd. (CHKP)

CHKP is a leading provider of cyber security solutions to corporate enterprises and governments globally. It offers network security, endpoint security, data security, and management solutions to enterprises, service providers, small and medium-sized businesses, and consumers.

On May 18, the company introduced malicious file protection for mobile devices. The new version of Harmony Mobile is expected to enhance CHKP’s mobile security solutions.

On May 17, CHKP partnered with Provision-ISR to provide on-device IoT security for video surveillance solutions. Analysts expect this solution to be the best in the market and aid both companies in reducing cyber crimes considerably.

In the fiscal first quarter (ended March 31, 2022), CHKP’s total revenues increased 7% year-over-year to $542.70 million. Its security subscription revenues increased 14% from the year-ago value to $201.60 million. The company’s non-GAAP EPS came in at $1.57, representing a 2% year-over-year improvement.

The consensus EPS estimate of $1.62 for the fiscal second quarter (ended June 2022) represents a marginal improvement year-over-year. The consensus revenue estimate of $560.38 million for the to-be-reported quarter indicates a 6.5% increase from the same period last year.

The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 5.2% year-to-date to close yesterday’s trading session at $122.63.

CHKP’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Quality, and within the Software - Security industry, it is ranked #5.

Click here to see the POWR ratings of CHKP for Growth, Value, Momentum, Stability, and Sentiment.

Qualys, Inc. (QLYS)

QLYS is a pioneer and leading provider of disruptive cloud-based IT, security, and compliance solutions. The company offers Qualys Cloud Apps, Threat Protection, Continuous Monitoring, Multi-Vector Endpoint Detection and Response, and Web Application Scanning, among other solutions. It serves enterprises, government entities, and small and medium-sized businesses across several industries.

On June 6, QLYS unveiled Vulnerability Management, Detection, and Response (VMDR) 2.0. with TruRisk scores and automated remediation workflows. This solution, designed for a quicker response to high-priority threats, is expected to be strongly demanded by companies highly susceptible to cyberattacks.

On May 3, the company introduced an enhanced channel and integration partner program, which might drive further growth and enable customer success.

QLYS’ revenues increased 17% year-over-year to $113.42 million in the first quarter ended March 31, 2022. The company’s non-GAAP operating income increased 27% from the year-ago value to $46.99 million, while its non-GAAP net income grew 19.5% year-over-year to $35.56 million. QLYS’ non-GAAP net income per share rose 20.3% from the prior-year quarter to $0.89.

Analysts expect QLYS’s EPS to increase marginally year-over-year to $0.79 and revenue to increase 17.9% year-over-year to $117.53 million for the fiscal second quarter (ended June 2022). It has surpassed the consensus EPS estimates in each of the trailing four quarters. QLYS has gained 18.2% over the past year to close the last trading day at $123.97.

QLYS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. QLYS has an A grade for Quality. Within the Software - Security industry, it is ranked #4.

Click here to see the additional POWR Ratings for QLYS (Growth, Value, Momentum, Stability, and Sentiment)

Palo Alto Networks, Inc. (PANW)

PANW is a provider of cybersecurity solutions. It offers a security platform that continuously allows enterprises, service providers, and government entities to secure all users, applications, data, networks, and devices with comprehensive visibility and context across all locations.

On June 23, 2022, PANW launched its Out-of-Band Web Application and API Security to Prisma Cloud. This new product aims to help organizations secure web applications with maximum flexibility amid the rapidly evolving digital world.

On May 24, 2022, PANW announced that Oracle Corporation (ORCL) had chosen Palo Alto Networks VM-Series Next-Generation Firewall (NGFW) as the technology to power the Oracle Cloud Infrastructure (OCI) Network Firewall. This reflects the company’s strong demand for its solutions and solid positioning in the cybersecurity space.

PANW’s total revenue increased 29.1% year-over-year to $1.39 billion in the fiscal third quarter ended April 30, 2022. Its non-GAAP net income grew 38.4% year-over-year to $193.10 million, while its non-GAAP EPS increased 29.7% from its year-ago value to $1.79.

Analysts expect PANW’s revenue for the quarter ended July 31, 2022, to increase 26.6% year-over-year to $1.54 billion. Its EPS is expected to increase 42.4% year-over-year to $2.28 for the quarter. It has surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 26.8% to close the last trading session at $492.58.

PANW’s strong fundamentals are reflected in its POWR Ratings. It has an A grade for Growth and a B grade for Quality. Again, in the same industry, it is ranked #8. Click here to see the other ratings of PANW for Value, Momentum, Stability, and Sentiment.

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CYBR shares were trading at $128.17 per share on Wednesday afternoon, down $0.69 (-0.54%). Year-to-date, CYBR has declined -26.03%, versus a -19.64% rise in the benchmark S&P 500 index during the same period.

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About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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