What happened
Not for the first time in recent days, the cybersecurity sector had quite a good ride on Thursday. Shares of many top titles in the industry traded higher than the S&P 500 index, with CrowdStrike (CRWD 4.48%) rising 1%, Palo Alto Networks (PANW 4.05%) advancing by 1.6%, and Fortinet (FTNT 2.14%) well out in front with a 3.3% gain. All were bolstered by a glowing research note from an analyst.
So what
The note was authored by Jefferies' (JEF 0.31%) Joseph Gallo. In a broad take on the cybersecurity sector in general, Gallo expressed quite the bullish outlook on its prospects.
"We note that investor sentiment for cyber has become increasingly positive, with the majority of cyber names climbing the wall of worry and trading up on better than expected [calendar] 4Q results," Gallo wrote.
However, the analyst cautioned that many companies in the sector labored to produce good results at the close of 2022. This, combined with what he described as "historical" softness in the first quarter and higher expectations following those encouraging showings, could modestly raise the risk of investing in such titles.
On evaluating implied new business growth for the cybersecurity titles Jefferies covers, Gallo singled out CrowdStrike, Palo Alto Networks, and Fortinet as the trio boasting "the most reasonable setups." He tagged three rivals, Okta, Zscaler, and Cloudflare, as being more risky investments.
NASDAQ: CRWD
Key Data Points
Now what
What's apparent is that the demand for cybersecurity services will remain robust; mostly it's a question of who gets the bigger slices of the pie. Digital threats are constant and they're often launched by determined bad actors, fueling the business of companies like CrowdStrike, Palo Alto Networks, or Fortinet, and providing a long runway for future growth.
