Our Best Large-Cap Cybersecurity Stock Idea

Palo Alto Networks (NYSE:PANW) is expected to benefit from more cybersecurity spending in the coming years

Capital Ideas Media | May 27, 2022 | SmallCapPower: With most of us working and shopping online due to COVID-19, cybersecurity is becoming increasingly important as companies are expected to ramp up spending in this area to keep their interests and customers safe.

(Originally published on Capital Ideas Media on February 23, 2021)

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According Grand View Research, the global cybersecurity market is expected to increase at a compound annual growth rate of 10%, reaching a value of more than US$326 billion by 2027.

[Editor’s Note: Shares of Palo Alto Networks have surged 33% since Capital Ideas wrote about the company 15 months ago.]

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The recent SolarWinds cyberattack on the U.S. government, meanwhile, should serve as a wake-up call for enterprises globally to take cybersecurity seriously.

With more than 69,000 end-user customers in various verticals in over 100 countries around the world, we believe Palo Alto Networks (NYSE:PANW) is the best large-cap way for investors to participate in global cybersecurity growth.

In a recent note to clients, Morgan Stanley analyst Keith Weiss called Palo Alto “a top cybersecurity pick in 2021,” raising his target price on the stock to $515 per share from $423 (implying about 30% upside from current levels).

Mr. Weiss believes the Company is well positioned to capture the rising security budgets he sees in 2021 as growing demand should allow Palo Alto Networks to sustain greater than 20% billings growth through the remainder of the current fiscal year.

During Q1 2021, Palo Alto saw its revenue rise 23% year over year to $946 million while ending the quarter with more than $4 billion in cash and equivalents on its balance sheet, which the Company can use to make more acquisitions such as its recently-announced $156 million deal for cloud security platform Bridgecrew.

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