Tech stocks, including those in the cybersecurity space, have declined this year due to rising interest rates and growing concerns about lower IT spending amid an impending recession. However, spending on cybersecurity products is expected to be more resilient compared to other categories given the rise in cyber attacks amid increased digitization and geopolitical tensions. Bearing in mind a favorable demand backdrop, we will use TipRanks’ Stock Comparison Tool to place Zscaler (NASDAQ:ZS), CrowdStrike (NASDAQ:CRWD), and CyberArk (NASDAQ:CYBR) against each other and pick the stock that could fetch the highest returns.
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Zscaler (ZS) Stock
Zscaler completed Fiscal 2022 (ended July 31, 2022) on a strong note by delivering upbeat fiscal fourth quarter results. Revenue surged 61% to $318 million compared to the prior-year quarter, while adjusted earnings per share (EPS) grew nearly 79% to $0.25. The company also issued upbeat Fiscal 2023 guidance, reflecting the robust demand for its Zero Trust security platform.
Zscaler is seeing impressive growth in its large enterprise customer base. At the end of Fiscal 2022, the number of customers with more than $1 million in annual recurring revenue (ARR) increased by 62% to 327. Also, the number of customers with over $100,000 in ARR grew by 41% to 2,089.
The cloud-native cybersecurity company continues to strengthen its offerings through innovation and strategic acquisitions. It recently acquired ShiftRight, a leading company in closed-loop security workflow automation.
Is ZS stock a Good Buy?
Last week, SMBC Nikko analyst Carson Sippel initiated coverage of Zscaler stock with a Buy rating and a price target of $220. Sippel feels that Zscaler is uniquely positioned to benefit from the ongoing shift of enterprises to the cloud and hybrid work.
Sippel called Zscaler “the most disruptive public security company.” However, the analyst pointed out that it is one of the expensive stocks in the enterprise software space despite the steep pullback this year.
Overall, Zscaler stock earns a Strong Buy consensus rating based on 20 Buys and five Holds. The average ZS stock price target of $219.67 implies 51.4% upside potential from current levels. Shares have plunged nearly 55% so far this year.
CrowdStrike Holdings (CRWD) Stock
CrowdStrike is a leading player in endpoint security. The company’s Falcon platform has helped extend its capabilities beyond endpoint security to other growth areas, like cloud security and identity protection.
Despite a challenging macro backdrop, CrowdStrike’s Q2 Fiscal 2023 (ended July 31, 2022) revenue increased 58% to $535 million. ARR at the end of Q2 surged 59% to $2.14 billion. Adjusted EPS jumped to $0.36 from $0.11 in the year-ago quarter, thanks to solid top-line growth and non-GAAP operating margin expansion.
CrowdStrike ended Q2 with 19,686 subscription customers, up 51% year-over-year. Solid Q2 results helped the company boost its full-year guidance. Based on its current portfolio and planned offerings, CrowdStrike sees a potential addressable market of $126 billion in 2025.
What is the Target Price for CrowdStrike Stock?
Recently, Evercore ISI analyst Peter Levine initiated coverage on CrowdStrike stock with a Buy rating and a price target of $250, as he feels that the stock is well positioned to be a core long-term cybersecurity pick. The analyst highlighted the company’s “hyper-growth profile coupled with profitability” and “best-in-class” cash flow margins.
On TipRanks, CrowdStrike scores a Strong Buy consensus rating backed by 24 Buys versus one Hold rating. At $236.64, the average CRWD stock price prediction suggests 55.1% upside potential. CrowdStrike stock has fallen 25.5% year-to-date.
CyberArk Software (CYBR) Stock
Israel-based CyberArk has a leading position in the identity security space. Robust demand for its products and a transition to a subscription business model fueled a 21% growth in Q2 revenue to $142.3 million. Furthermore, the company reported a lower-than-anticipated adjusted loss per share of $0.27.
Additionally, ARR increased 48% to $465 million as of Q2-end. CyberArk had over 1,000 customers with more than $100,000 in ARR, reflecting an increase of over 50% year-over-year.
Solid performance in the first half of the year helped the company raise its full-year revenue and ARR guidance. Overall, CyberArk appears to be on track to achieve its $1 billion ARR target by June 2025.
Is CyberArk a Good Stock to Buy?
Recently, Bank of America Securities analyst Tal Liani raised his price target for CyberArk stock to $185 from $170 and maintained a Buy rating. Liani stated, “Our target valuation increase is related to positive channel checks, favorable market positioning and tailwinds for growth in the PAM [privileged access management] market, which we believe is an underappreciated market.”
Overall, consensus among analysts is a Strong Buy that breaks down into 17 Buys and one Hold. The average CYBR stock price target of $181.28 implies 29.2% upside potential. Shares have declined nearly 19% in 2022.
Conclusion
Wall Street is highly bullish about Zscaler, CrowdStrike, and CyberArk based on the robust demand for cybersecurity solutions amid rising cyber threats. Currently, analysts estimate higher upside potential in CrowdStrike stock than in Zscaler and CyberArk.
