Citi Says Demand In Security Looks Strong For 2016

In a report published Monday, Walter Pritchard of Citi discussed the findings from his fielded survey of 51 Chief Information Security Officers.

According to Pritchard, his survey found a willingness of CIOs to accelerate their security-related spending budget in 2016 by approximately 8 percent from a 5 percent growth in 2015. The analyst added that network spend will yet again outpace end-point spend, while software and personnel spend outgrow hardware.

FireEye Upgraded To Buy

FireEye showed "exceptional strength" in Pritchard's survey, as the company showed the "strongest spending intentions" among the CIOs surveyed. The analyst added that while he doesn't typically correlate survey data to any one quarter, his survey is convincing enough to assume FireEye's third-quarter miss was "more of an execution issue" rather than a change in demand.

Related Link: FireEye Plunged 25%: Are Analysts Saying Now Is The Time To Buy?

Prichard noted three other reasons to justify his upgrade of FireEye: 1) the company's security offerings are "too strong to ignore," 2) a "favorable" risk to reward profile based on the stock's current valuation and 3) a sentiment that is "quite negative" versus its peers.

Shares were upgraded to Buy from Neutral with a price target raised to $35 from a previous $31.

Vendor Stand-Outs

Pritchard also stated that Splunk Inc SPLK, Imperva Inc IMPV, and Palo Alto Networks Inc PANW all showed "exceptional strength." Meanwhile, legacy vendors such as Cisco Systems, Inc. CSCO and Microsoft Corporation MSFT were both "strong in their respective areas."

Finally, Symantec Corporation SYMC, Proofpoint Inc PFPT, Fortinet Inc FTNT and Check Point Software Technologies Ltd. CHKP all showed "less favorable trends."