Without a doubt, one of the biggest concerns of business, industry and the government is the need for information technology projecting cybersecurity. Once again, Wall Street is expecting growth of 5% to 10% over the next year, similar to 2018, with the European Union’s General Data Protection Regulation continuing to be the biggest tailwind for the segment.
This law on data protection and privacy for all individuals within the EU and the European Economic Area (the EU plus Iceland, Liechtenstein and Norway) also addresses the export of personal data outside these areas.
A new Jefferies report on cybersecurity points to cloud-based solutions as a solid growth area and noted this:
Strong Demand for Identity Solutions, with a shift towards cloud-based identity and access management or IAM. 75% use cloud-based, plan to shift to such, or use a mix of cloud and on-premise solutions (up from 66%). Multi-Factor Authentication (MFA) ranked highest in spending priority, followed by access management, Privileged access management (PAM), Identity Governance and Administration (IGA).
The report also said this when discussing network security:
In network security we see strong growth for cloud-based secure web gateways, cloud-based firewalls, and subscription services attached to Next Generation Firewall (NGFW) appliances. In endpoint, we see a continued trend towards next-generation solutions from both a customer and vendor perspective (including both traditional vendors and upstarts). Identity solutions also appear in high-demand, with the highest demand being for cloud-based solutions.
We screened the firm’s Buy-rated stocks and found the following four top picks for aggressive accounts.
Check Point Software Technologies
This stock has taken off recently but still offers solid upside. Check Point Software Technologies Ltd. (NASDAQ: CHKP) provides network security solutions, selling software, hardware and subscription services for IT security, with a focus of reducing complexity of security management. Its hardware is based on a software blade architecture that allows for multiple security functions to be run concurrently.
Check Point sells its solutions to service providers, small and medium-sized businesses, consumers and enterprises, including all the Fortune 100 companies. This long-time industry leader used to be a must-own stock for tech portfolios, and it has burst back into prominence.
The Jefferies price target for the shares is $140, but the Wall Street consensus target is just $118.33. The shares closed above that figure on Monday at $121.15.
This is a smaller and perhaps less-known company on which Jefferies is very positive. Mimecast Ltd. (NASDAQ: MIME) provides cloud security and risk management services for corporate information and email.
The company offers Mimecast Email Security services, including targeted threat protection that extends traditional gateway security to protect organizations against targeted attacks and audit and reporting, and it enables administrators and security specialists to monitor and report attempted attacks. Mimecast also offers URL Protect, which tackles threats from emails containing malicious links.
Last year the company introduced the latest capability of its Targeted Threat Protection service, Internal Email Protect, the first-to-market cloud-based security service providing threat capabilities for internally generated email. Internal Email Protect allows customers to detect and remediate security threats that originate from their users’ email accounts.
Jefferies price target of $55, while the posted consensus target was last seen at $52.93. The shares closed trading most recently at $47.82 apiece.