FBR: Cybersecurity Momentum 'Solid,' In 'Early Innings'

Analysts at FBR & Co. said in a new research note that there is "strong momentum" in cybersecurity following a "white hot" March quarter. This bodes well for continued gains in FireEye Inc FEYE, Palo Alto Networks Inc PANW, Check Point Software Technologies Ltd. CHKP, Fortinet Inc FTNT, and Proofpoint Inc PFPT. FBR placed Outperform ratings on each of those names.

FBR estimated that the cybersecurity market will grow by 28 percent in 2015 as companies dedicate "significantly more resources/manpower on network protection." Specifically, companies will look to manage advanced persistent threats, upgrade to next-generation firewalls, and implement robust email, mobile and cloud security protocols.

In addition, FBR said there are three trends that will continue growth in these names. First, the upgrade cycle is in the "early innings." Enterprises and governments "in all geographies" are spending heavily. The analysts said that the number of seven-figure deals have increased by 40 percent year-over-year. Second, there is a massive cloud transition that continues - spurring spending targeted toward the cloud. Finally, the U.S. federal government is moving to push cybersecurity initiatives via the Protecting Cyber Networks Act and the National Cybersecurity Protection Advancement Act.

The cybersecurity names have performed well this year. In comparison to the Nasdaq, which has gained 7.5 percent year-to-date, FireEye gained 43 percent, Palo Alto Networks added 33 percent, Check Point Software is up 11 percent, Fortinet increased 28 percent, and Proofpoint gained 20 percent.