Underlying Demand Trends Powering Cybersecurity Remain Intact

By Sam Boughedda

In a note on cyber stocks on Thursday, Evercore ISI started CrowdStrike Holdings Inc. (NASDAQ:) and Zscaler (NASDAQ:) with Outperform ratings and Okta, Inc. (NASDAQ:) with an Underperform rating. In addition, analysts there assumed co-coverage of Palo Alto Networks (NASDAQ:) with an Outperform rating.

CrowdStrike’s price target was set at $250, Zscaler at $235, Okta at $45 per share and Palo Alto Networks at $207 per share.

“We are initiating coverage on cybersecurity with a bullish view that the secular trends powering a ~$100bn TAM growing at a ~8% CAGR are durable even in a tougher economic backdrop,” said the analysts.

Evercore added that the underlying demand trends powering cybersecurity growth remain largely intact, and “digital transformations are not going away, nor can anyone hit pause overnight.”

The analysts explained that the firm is not saying the sector is recession proof “but the convergence of 1) geo-political risk; 2) an ever-growing domestic threat landscape; 3) digital transformations which fundamentally require you to change your security architecture; and 4) the new reality of hybrid work which creates a whole new level of cyber risk to any organization, creates a unique set of industry specific dynamics not present in any other sub-sector of tech.”