One very good way to get a bead on how a product is performing is to go right to the source and ask the people that are the most involved with selling it. Given the almost daily reports of a security breach, the fact the security software sector is growing fast is not a surprise.
The analysts at Cowen just completed the firm’s third security software reseller survey, and industry growth remains very solid. In fact, the resellers see blended average growth of 16% this year. The resellers also say that customers are more than willing to spend more money to combat advanced persistent threats, or APTs. The bottom line for tech investors: this industry still has room to grow — a lot of room.
Here are the three top stocks to buy in the security software arena, says Cowen.
CheckPoint Software Technologies Ltd. (NASDAQ: CHKP) remains one of the top tech stocks to buy on Wall Street for a security presence, and the Cowen analysts think the company is one of the best in helping customers protect against APTs. The company continues down the path of its Software Blade strategy and is arguably more candid about its installed base advantage, where it will look to continue to consolidate product features within its platform and provide customers a superior cost of ownership.
The Cowen price target for the stock is $72. The Thomson/First Call consensus price target is slightly higher at $73.83. The stock closed on Monday at $69.26.
FireEye Inc. (NASDAQ: FEYE) was absolutely crushed in the spring tech sell-off for many reasons, not the least of which included a very rich valuation, continued deal making and insider stock lock-ups expiring. The stock finally bottomed in mid-May and has traded pretty much on a sideways basis all summer and now into the fall. FireEye recently announced the new release of FireEye Email Threat Prevention Cloud that adds the traditional email security features of anti-spam and antivirus protection to its advanced threat detection capabilities.
FireEye was another one that showed up very well in the resellers survey for APT protection. The Cowen price target is $58, and the consensus is at $44.22. FireEye closed Monday at $31.45.
Splunk Inc. (NASDAQ: SPLK) reported first-quarter total revenue of $99.9 million, up 53% year-over-year, while the second quarter also came in red-hot, with much better than expected results. With those kinds of solid revenues, the company could start to look attractive to a mega-cap tech. Some on Wall Street think that a fit with IBM could be a possibility.
Splunk is one of the companies that the surveyed resellers pointed to as having an extreme amount of current momentum. It provides the leading software platform for real-time Operational Intelligence. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices.
The Cowen price target is $60, and the consensus target is higher at $66.12. Shares closed trading on Monday at $55.22.
With a fast-growing space in the market, security is foremost on the mind of everybody in the business world. These companies are combining top technology and price points that work for business, as they constantly upgrade their protection for sensitive data.