Cybercrimes are on the rise. In July, President Biden issued a national security memorandum aimed at strengthening cybersecurity for critical infrastructure. This followed a ransomware attack that breached networks across the United States and an attack on Colonial Pipeline, forcing the company to shut down approximately 5,500 miles of oil pipeline.
Amid the increasing need for cybersecurity, IronNet, Inc. (IRNT) has been gaining traction. Shares of the company garnered investors’ attention, reaching a year-to-date high on September 16 after the company reaffirmed its fiscal year 2022 revenue and annual recurring revenue guidance on September 14. However, the stock could not sustain its momentum and has slipped 8.5% in price over the past five days and 5% intraday to close its last trading session at $29.41. Furthermore, analysts expect its EPS to remain negative at least until the next fiscal year.
However, given the expanding market for cybersecurity solutions, we think investors looking to cash in on the industry’s solid growth prospects could consider betting on Check Point Software Technologies Ltd. (CHKP), Trend Micro Incorporated (TMICY), and Radware Ltd. (RDWR).
Click here to checkout our Cybersecurity Industry Report for 2021
Check Point Software Technologies Ltd. (CHKP)
CHPK develops, markets, and supports a range of products and services for IT security worldwide. The San Carlos, Calif., company offers a portfolio of network security, endpoint security, data security, and management solutions.
Omdia’s Market Radar Mobile Security Management Solutions has recognized CHKP as a Market Leader. This recognition highlights CHKP’s ability to deliver its comprehensive capabilities and reflects its leadership position in the industry.
On August 30, CHKP announced the acquisition of Avanan, the fastest-growing cloud email security company. The integration of Avanan technology into CHKP architecture aims to deliver the highest level of security to remote workforces worldwide. This acquisition should enable CHKP to emerge as a leader in the cybersecurity space.
CHKP’s revenues increased 4.1% year-over-year to $526.10 million in its fiscal second quarter, ended June 30. Its non-GAAP operating income and non-GAAP EPS improved marginally from their year-ago values to $257.10 million and $1.61, respectively. In addition, its cash flow from operating activities grew 4.4% year-over-year to $263.60 million.
Analysts expect CHKP’s revenues to increase 3.9% year-over-year to $2.14 billion in the current year. Also, its revenue is expected to increase 3.3% from the current year to $2.22 billion in the following year. The $7.19 consensus EPS estimate for the next year indicates a 6.2% rise from the current year. Furthermore, CHKP surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The stock has gained marginally intraday to close yesterday’s trading session at $114.25.
It is no surprise that CHKP has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality, and a B grade Value. Among the 25 stocks in the Software - Security industry, CHKP is ranked #5.
To see additional CHKP ratings for Growth, Sentiment, Stability, and Momentum, click here.
Trend Micro Incorporated (TMICY)
Based in Japan, TMICY develops and sells security-related software for computers and the internet. The company offers hybrid cloud security solutions and cloud conformity security solutions, network security solutions, including intrusion prevention, and threat protection solutions.
On September 20, TMICY reported that four of its products have been selected by Yokogawa Electric as partner products for its industrial control systems (ICS). Regarding this, Akihiko Omikawa, executive vice president of IoT security for Trend Micro, said, “We’re delighted it now comes selected by Yokogawa Electric, which is further proof that our industrial security offerings deliver world-class protection and performance.”
Earlier, TMICY collaborated with Microsoft Corp. (MSFT) to deliver enhanced cybersecurity to their shared its customers. The collaboration also focuses on developing cloud-based cybersecurity solutions on Microsoft Azure and generating co-selling opportunities. This should enable TMICY to accelerate its digital transformation and enhance its security offerings.
For the six months ended June 30, TMICY’s net sales increased 9% year-over-year to ¥91.33 billion ($0.83 billion). Its gross profit stood at ¥71.24 billion ($0.65 billion), up 5% from the same period last year. Its operating income grew 10.3% from the year-ago value to ¥22.12 billion ($0.20 billion). And its net income attributable to owners of the parent rose 9.1% year-over-year to ¥16.50 billion ($0.15 billion) over this period.
A $1.70 billion consensus revenue estimate for the fiscal period ending December 2021 indicates a 150.6% increase year-over-year. Furthermore, the Street expects the company’s revenue to rise 5.3% year-over-year to $1.79 billion in the following fiscal period, ending December 2022.
Shares of TMICY have gained 11.7% in price over the past six months and 7% over the past month.
The stock has an overall rating of B, translating to Buy in our proprietary POWR Ratings system. In addition, TMICY has a grade of A for Stability and Quality, and a B for Value. It is ranked #3 in the Software - Security industry.
Click here to view additional TMICY Ratings for Momentum, Growth, and Sentiment.
Radware Ltd. (RDWR)
RDWR develops, manufactures, and markets cyber security and application delivery solutions for applications in physical, virtual, cloud, and software-defined data centers worldwide. It is headquartered in Tel Aviv, Israel. RDWR was recognized as a global leader in Forrester’s March 2021 report.
RDWR partnered with Azion, a global leader in edge computing in Brazil, earlier this month to provide customers with its BOT management protection service through Azion’s edge platform. This is aligned with the company’s strategy to strengthen its global presence.
On September 22, RDWR announced that Liberty Group Limited expanded its RDWR security services to enhance data center protection and mitigate DDoS attacks. Earlier, one of the world’s largest equipment providers engaged RDWR for its Cloud DDoS protection and 24X7 emergency response services. And for the past few months, RDWR has been rapidly onboarding new customers that are facing ransomware threats. This reflects the company’s dominance in the cybersecurity industry.
RDWR’s revenues increased 19.2% year-over-year to a record $69.67 million in its fiscal second quarter, ended June 30. Its non-GAAP operating income grew 106.1% from its year-ago value to $8.76 million. RDWR’s non-GAAP net income came in at $8.89 million, indicating a 48.4% rise year-over-year. The company’s non-GAAP EPS increased 46.2% year-over-year to $0.19.
The Street expects RDWR’s revenues to rise 13.5% year-over-year to $70.95 million in the current quarter, ending September 2021. A $0.19 consensus EPS estimate for the current quarter indicates a 5.6% improvement year-over-year. RDWR has a notable earnings surprise history also; it beat the consensus EPS estimates in three out of the trailing four quarters.
Over the past year, the stock has gained 41.9% in price to close yesterday’s trading session at $35.24. RDWR has gained 27% year-to-date.
RDWR’s solid growth prospects are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. RDWR has an A grade for Growth and Quality. It is ranked #1 in the Software - Security industry.
Get additional POWR Ratings for Value, Stability, Momentum, and Sentiment here.
Click here to checkout our Cybersecurity Industry Report for 2021
CHKP shares were trading at $115.98 per share on Thursday afternoon, up $1.73 (+1.51%). Year-to-date, CHKP has declined -12.74%, versus a 19.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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