Technology was a big 2020 winner and has started 2021 out the same way. Many top software stocks have had an outstanding start to the year. Areas that continue to be critical for companies and governments include protecting data and keeping malicious hackers and malware from invading information technology systems and infrastructure.
In a new research report, Goldman Sachs remains very positive on the top cybersecurity and analytics stocks, and with good reason. The rate of serious security problems has increased, and top management won’t stay put long at major U.S. companies if the ultimate effort for security and safety isn’t undertaken and satisfactorily completed.
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Goldman Sachs noted four top new trends in its new research report:
1) Digital transformation initiatives, coupled with an elevated threat environment, are expected to drive a healthy demand environment for security in 2021.
2) Consolidation emerged as a common theme, driven by demand for less complexity and unified management of security posture.
3) Vendors anticipate an improving macro environment will support growth ahead.
4) The pace of cloud migration is accelerating, but security vendors anticipate hybrid demand for some time.
Four stocks are rated Buy and recommended. They are outstanding ideas for aggressive growth investors looking to add this hot technology silo. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
FireEye
This stock was on fire years ago but has traded sideways for almost a year after missing earnings in the past. FireEye Inc. (NASDAQ: FEYE) has been mentioned over the years as a takeover target, and trading 95% below highs that were printed at this time in 2014, it may indeed be on the radar.
The company provides network security solutions addressing advanced persistent threats, which traditional IT security tools like anti-virus, intrusion prevention systems, email/web gateways and firewalls, have largely failed to protect from. These solutions typically compare incoming traffic to a list of known threat signatures, failing to identify and protect against unknown targeted attacks, versus FireEye’s solution that focuses on the behavior of traffic rather than a signature.
Goldman Sachs has remained positive as the company revamps:
Management noted that its transition to a Security as a Service platform provider from a hardware and services focused vendor is progressing well, with a meaningful shift of revenue and billings to high growth areas of the business. As the company focuses on building out Mandiant Advantage, it sees a meaningful opportunity ahead to operationalize and scale its proprietary threat intelligence and domain expertise.
The Goldman Sachs price target for the shares is $26, and the Wall Street consensus target is lower at $22.58. FireEye stock closed most recently at $21.46 per share.
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