While the COVID-19 pandemic has been a boon for companies that offer solutions to facilitate remote activities, the confidentiality and security aspect of online data--its vulnerability to cybercrimes--has become a new imperative. Cyber-attacks have become rampant over the past few months. As per the FBI, in May 2020, there was an 800% surge in reported ransomware attacks and other cybercrimes.
These attacks have led to the disclosure of sensitive information for individuals, companies and the U.S. government in the recent past. Because the global economy has grown highly reliant on cyberspace, companies have become more vulnerable to bad actors and malevolent attacks. Consequently, the demand for cybersecurity is on the rise. According to the latest estimates by Canalsys, cybersecurity spending is expected to climb 10% to $60.2 billion in 2021. This suggests good times ahead for core cybersecurity solution providers.
Fortinet, Inc. (FTNT), NortonLifeLock Inc. (NLOK), and Proofpoint, Inc. (PFPT) are involved primarily in developing cyber safety products and services. These stocks have demonstrated strong performance over the past year, and we think are likely to continue their momentum this year and beyond.
Fortinet, Inc. (FTNT)
FTNT is the provider of broad, integrated and automated cybersecurity solutions globally. FortiGate hardware and software licenses, FortiSwitch switching solution, FortiAP secure wireless networking solutions, and FortiExtender WAN connection. FTNT offers its products and services globally.
FTNT has released the latest version its flagship operating system as 7.0 FortiOS. It has more than 300 new features and enhances the Fortinet Security Fabric and Fortinet’s ability to deliver continuous security for networks, endpoints, and clouds.
With more than 300 new features, FortiOS 7.0 enhances the Fortinet Security Fabric and Fortinet’s ability to deliver consistent security for all networks, endpoints, and clouds.
During the fourth quarter, ended December 31, 2020, FTNT’s revenue climbed 21% year-over-year to $748 million, led by its service revenue segment. Its total billings for the quarter climbed 19.8% to $960.9 million. Its EPS climbed to $0.89 from $0.67 posted in the same period last year, and its free cash flow at the end of the quarter was $264.2 million.
Analysts expect FTNT’s revenue for the quarter ending March 31, 2021 to be $679.1 million, representing a 17.7% increase year-over-year. Its EPS for the quarter is likely to increase 23.3% to $0.74.
FTNT ended Friday’s trading session at $164.73, rising 40.3% over the past year. During the past six months, FTNT gained 30%.
FTNT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has an A grade for Quality and B for Momentum. It is ranked #11 of 25 stocks in the Software - Security industry.
In total, we rate FTNT on eight different levels. Beyond what we stated above, we have also given FTNT grades for Growth, Value, Stability, and Stability. Get all the FTNT ratings here.
NortonLifeLock Inc. (NLOK)
NLOK is one of the most popular cyber safety solution providers for consumers globally. Norton security solutions, its flagship product, is a subscription service that protects PCs and mobile devices against malware, viruses, adware, ransomware, and other online threats. The company also offers LifeLock identity theft protection solutions.
NLOK has agreed to acquire Avira in an all-cash transaction for nearly $360 million from Investcorp Technology Partners. Avira offers a consumer-focused portfolio of cybersecurity and privacy solutions to Europe and key emerging markets. The strategic alliance is believed to add nearly three points of growth to NLOK’s revenue with more than 1.5 million paying customers.
NLOK’s revenue for the third quarter ended January 31, 2021 rose 3% year-over-year to $639 million. Its consumer billings were $700 million, and its direct customer count was 21 million. Its EPS for the quarter climbed 52% over the year to $0.38. And its average revenue per user rose to $9.10 per month. A consensus revenue estimate for the quarter ending March 31, 2021 is $659.6 million, representing a 7.4% increase year-over-year. Meanwhile, EPS is likely to grow 46.2% to $0.38.
Over the past year, NLOK has gained 4.2% to end Friday’s trading session at $21.48.
NLOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. NLOK has an A grade for Quality, and B for Growth and Momentum. It is ranked #6 of 25 stocks in the Software - Security industry.
Click here to see the additional POWR Ratings for NLOK’s (Value, Stability, and Sentiment).
Proofpoint, Inc. (PFPT)
PFPT is a security-as-a-service provider that enables large- and mid-sized organizations to protect, defend, archive, and manage their sensitive data globally. The company also offers integrated email security, advanced threat, cloud security, information protection, digital risk protection, and product services.
In October, PFPT contributed to Content Capture for Microsoft Teams, as a part of its latest compliance solution designed for global regulated organizations.
PFPT’s revenue for the fourth quarter ended December 31, 2020 climbed 13% year-over-year to $275.1 million. Its billings for the quarter rose 8% over the year to $374.9 million. And its loss per share expanded to $0.61 from $0.51 posted in the prior year period.
Analysts expect revenue for the quarter ending June 30, 2021 to be $293.5 million, representing 15.8% year-over-year growth. Its EPS is likely to grow at the rate of 63.7% per annum over the next five years. For the first quarter ending March 31, 2021, PFPT expects revenue to be in the range of $280 million - $282million.
PFPT has climbed 7% during the past year to close Friday’s session at $134.93. Over the past six months, the stock has gained 28%.
PFPT's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. PFPT has a B grade for Momentum and Sentiment. In the Software - Security industry, it is ranked #10.
In addition to the POWR Ratings grades I've just highlighted, you can see PFPT’s ratings for Growth, Value, Stability, and Quality here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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FTNT shares were trading at $164.89 per share on Tuesday afternoon, up $0.16 (+0.10%). Year-to-date, FTNT has gained 11.01%, versus a 4.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.
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