Cybersecurity stocks have been something of a mixed proposition these days. As individual companies, and even end users, balance their need for security against their need for a decent bottom line, it’s starting to hurt some issues. Today, though, they proved mixed once again after Jefferies analysts got involved. Zscaler (NASDAQ:ZS) and Fortinet (NASDAQ:FTNT) turned up, but CrowdStrike (NASDAQ:CRWD) spent quite a bit of Thursday afternoon struggling to get—and stay—green for any length of time.
Jefferies, via analyst Joseph Gallo and his team, offered upgrades for Zscaler and CrowdStrike but a downgrade for Fortinet. Both Zscaler and CrowdStrike went from Hold to Buy, and Fortinet went the other way, from Buy to Hold. Gallo noted that the environment remains a challenge for all concerned. After all, most companies can likely get by by using last year’s firewall for another year or so and are acting accordingly to preserve cash in what looks like an increasingly perilous macro environment.
Gallo called out Zscaler as “…among the best placed for the distributed and cloud-based world” while also citing CrowdStrike for its long-term potential. However, Fortinet took a drop mostly because demand seems to be in decline for the short term. According to Gallo’s note, Fortinet will have to pick up its research and development operations to keep up its secure access server edge (SASE) development. For its part, Fortinet has already been developing a new project for Google Cloud, which should represent a whole new field for Fortinet to secure and hopefully break away from the notion that it isn’t already driving its R&D expectations hard.
What is the Best Cybersecurity Stock to Buy?
Turning to Wall Street, CRWD stock may have landed an upgrade, but it’s lagging behind in several places. Not only was it down today, but this Strong Buy also has the lowest expectations from analysts, as its $196.03 average price target can only give it 4.52% upside potential. Meanwhile, Fortinet, which got downgraded, is the leader in upside. This Moderate Buy boasts 28.63% upside potential on its average price target of $74.86.
