Macquire Bullish On Cyber Security Firms

Macquarie initiated coverage on several security software companies Tuesday and expressed that the “relevancy of cyber security has never been greater.”

Analyst Aaron Schwartz noted that “Cyber security has been elevated to a top issue from an afterthought at most organizations and is now at the forefront of corporate policy, which is putting top down pressure on the integrity of overall security strategy and drawing acknowledgement that the traditional security approach is flawed.”

“The industry is seeing fundamental change where new approaches, including analytic and cloudbased solutions, will see greater adoption which will bring leadership change and participation of non-traditional competitors,” according to Schwartz.

As examples of a changing landscape, Schwartz mentioned that in 2014, “the well-known proxy advisor, I.S.S., recommended majority board change at Target Corporation—solely due to security breaches—and the US Department of Justice filed criminal charges against the Chinese military for computer hacking and economic espionage; the first ever cyber security charges against a nation state."

Schwartz concluded that these “events have been catalysts to elevate cyber security to a board-level concern, increasing the relevancy of security within the overall IT spectrum. The long term bullish security thesis involves an increasing share of IT spend where, despite the relevancy and cost of attach, security remains stuck at only 4 percent of total IT spend.”

Below are Macquarie’s price targets organized by ratings on cyber security companies.

Outperform

Barracuda Networks Inc. CUDA $35 price target

Check Point Software Technologies Ltd. CHKP $80 price target
 
Imperva Inc. IMPV $47 price target

Palo Alto Networks Inc. PANW $120 price target
 
Proofpoint Inc. PFPT $48 price target

Neutral

FireEye Inc. FEYE $34 price target

Fortinet Inc. FTNT $28 price target

Symantec Corporation SYMC $26 price target
 
Underperform

Qualys Inc. QLYS $28 price target