Zacks Industry Outlook Highlights Palo Alto, Fortinet, Okta and CyberArk

For Immediate ReleaseChicago, IL – March 19, 2025 – Today, Zacks Equity Research discusses Palo Alto Networks, Inc. PANW, Fortinet, Inc. FTNT, Okta, Inc. OKTA and CyberArk Software Ltd. CYBR.Industry: SecurityLink: https://www.zacks.com/commentary/2431237/4-security-stocks-to-watch-on-prospering-industry-trendsThe Zacks Security industry is experiencing robust demand for cybersecurity products, driven by the increasing need for secure networks and cloud-based applications, especially with the rise of hybrid work environments. This surge in demand is largely due to a significant increase in data breaches, prompting companies to seek comprehensive IT security solutions. The growing need for privileged access security, fueled by digital transformation and cloud migration strategies, is further boosting the demand for cybersecurity solutions.Companies like Palo Alto Networks, Inc., Fortinet, Inc., Okta, Inc. and CyberArk Software Ltd. are benefiting from these trends. However, the industry's short-term growth prospects may be hampered as organizations delay investments in large and costly technology products due to global economic slowdown concerns, macroeconomic challenges and geopolitical tensions. Furthermore, increased operating expenses related to hiring new employees and implementing sales and marketing strategies to gain market share are expected to pressure profit margins in the near term.Industry DescriptionThe Zacks Security industry encompasses companies that provide both on-premise and cloud-based security solutions. These solutions cater to a variety of needs, such as identity access management, infrastructure protection, integrated risk management, malware analysis and Internet traffic management, among others.The industry offers a diverse range of security solutions, many of which can be used interchangeably. These solutions are broadly categorized into three types — Computer Security, Cybersecurity and Information Security. Computer Security focuses on safeguarding the software and hardware of computer systems from vulnerabilities.Cybersecurity encompasses areas like web security, network security, application security, container security and information security. Information Security deals with the protection of data in all forms, whether physical or digital.Major Trends Shaping the Future of the Security IndustryRising Cyber Threats Drive IT Security Demand: The increasing frequency of cyberattacks is escalating the need for robust security solutions. These threats not only impact individual companies but also pose risks to national security in some countries. Companies in the security industry are actively addressing these issues as there is a growing need for protection against spear phishing, credential-based attacks, account takeovers and ransomware.Accelerated Digital Transformation Fuels Growth: The shift toward digital transformation and cloud migration is driving the demand for cybersecurity solutions. Sectors ranging from education and entertainment to healthcare are increasingly relying on technology, making them vulnerable to cyberattacks. Public institutions and large companies, as well as smaller organizations with less stringent security measures, are at risk. The rollout of 5G will expand the Internet of Things (IoT) and artificial intelligence (AI), which, while simplifying operations, will increase cybercrime rates due to greater technological reliance.Macroeconomic Headwinds May Impact IT Spending: Uncertain macroeconomic conditions and geopolitical issues may lead enterprises to delay significant IT investments. Amid current economic challenges, organizations are likely to conserve cash and reduce spending, which could negatively affect the security market in the short term.High Operating Expenses Could Affect Profitability: To remain competitive in the IT security market, companies are continually investing in expanding their capabilities. This includes substantial investments in research and development to enhance product offerings and improve overall security solutions for clients. Additionally, firms are heavily investing in sales and marketing, particularly by increasing their sales workforce. These elevated operating expenses, aimed at gaining market share, may reduce profit margins in the near term.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Security industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #82, which places it among the top 33% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. The industry’s bottom-line estimate for 2025 has moved up to $1.43 from earnings of $1.29 expected a year ago.Industry Outperforms S&P 500 and SectorOver the past year, the Zacks Security industry has outperformed the broader Zacks Computer and Technology sector and the S&P 500 composite.The industry has soared 23.1% during this period, while the broader sector and the S&P 500 have returned 8.2% and 10.2%, respectively.Industry's Current ValuationOn the basis of the forward 12-month price-to-sales ratio (P/S), which is a commonly used multiple for valuing Security stocks, the industry is currently trading at 13.19, higher than the S&P 500’s 4.91 and the sector’s 5.81.Over the last five years, the industry has traded as high as 19.36X and as low as 6.92X, with a median of 12.21X.4 Security Stocks to WatchFortinet: It is a provider of network security appliances and Unified Threat Management (“UTM”) network security solutions to enterprises, service providers and government entities worldwide. Currently, Fortinet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Fortinet is benefiting from strong demand from large enterprise customers and growth in its security subscriptions. Continued deal wins, especially those of high value, are a key driver. The focus on enhancing its UTM portfolio through product development and acquisitions is a tailwind.Moreover, the growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions could be a key growth driver for Fortinet in the long run. The market research firm Future Market Insights predicts that the market size for SD-WAN solutions could reach $80.91 billion by 2034 from $5.36 billion in 2024, indicating a CAGR of 31.6%. As there are only a few vendors that offer security and SD-WAN solutions, Fortinet is well-positioned to capitalize on the increasing opportunities in the market.The Zacks Consensus Estimate for Fortinet’s 2025 earnings has been revised upward by 2 cents to $2.45 per share over the past 30 days. FTNT shares have soared 42.6% over the past year.Okta: It is a leading provider of identity security for enterprises. Okta’s Workforce Identity Cloud combines access management, identity governance and privileged access to provide a gateway that enables its workforce-based customers to securely connect to Okta’s applications from multiple devices. Okta’s Customer Identity Cloud provides bot detection, fraud prevention and account takeover attack protection. Both platforms offer Adaptive Multi-Factor Authentication for secured connectivity.Its Workforce Identity Cloud and Customer Identity Cloud solutions are experiencing increased traction as a growing number of organizations are adopting digital transformation and cloud migration strategies. The company was serving 19,650 customers at the end of the fourth quarter of fiscal 2025.Okta currently carries a Zacks Rank #2. The consensus mark for its fiscal 2026 earnings has been revised upward by 23 cents to $3.14 per share over the past 30 days. Shares of OKTA have risen 9.7% over the past year.Palo Alto Networks: It offers network security solutions to enterprises, service providers and government entities worldwide. The company has been benefiting from continuous deal wins and the increasing adoption of its next-gen security platforms, which are attributable to the rise of the hybrid work trend and the heightened need for stronger security.Palo Alto Networks has continued to innovate, focusing on AI, automation and cloud security to stay ahead of the competition. Its partnership with NVIDIA to develop AI-driven private 5G security solutions highlights its commitment to emerging technologies and next-generation security demands.The company’s platformization strategy has also been a game-changer. Instead of relying on one-off product sales, Palo Alto Networks has transitioned to a bundled cybersecurity platform approach, which enhances recurring revenues and customer retention. This strategy ensures financial stability and predictable growth.The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s fiscal 2025 earnings has been revised upward by 5 cents to $3.22 per share over the past 30 days. PANW shares have rallied 31.9% over the past year.CyberArk Software: Founded in 1999, the company offers services that protect organizational privileged accounts from cyber-attacks. CyberArk Software is benefiting from the rising demand for cybersecurity and privileged access security solutions due to the long list of data breaches and increasing digital transformation strategies.A strong presence across verticals, such as banking, healthcare, government and utilities, is safeguarding CyberArk Software from the adverse effects of softening IT spending. The company’s strategic mix shift toward software-as-a-service and subscription-based solutions is driving top-line growth.CyberArk Software currently carries a Zacks Rank #3. The consensus mark for its 2025 earnings has been revised upward by 7 cents to $3.65 per share over the past 30 days. Shares of CYBR have risen 32.3% over the past year.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fortinet, Inc. (FTNT): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report CyberArk Software Ltd. (CYBR): Free Stock Analysis Report Okta, Inc. (OKTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks