3 Cybersecurity Picks For The Second Half Of 2021

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Morgan Stanley analyst Hamza Fodderwala released a note on the cybersecurity industry Friday, highlighting his outlook on the industry as well as his top cybersecurity stock picks.

Cybersecurity Industry Overview

Cyberattacks such as the ones on the Colonial PipelineJBS and Kaseya have dominated headlines, exposing vulnerabilities that corporations face following the rapid shift to digitalization over the past year, said Fodderwala. 

The Morgan Stanley analyst surveyed 60 U.S.-based chief security officers who suggested a heavy uptick in corporate cybersecurity spending into the second half of 2021, the analyst said. 

Ninety-two percent of CSOs surveyed indicated the "heightened cyber threat environment" is a primary reason for 2021's "accelerating security spend," he said.

Specifically, identity and access management and endpoint security remain the "top spending priorities in 2021," according to the survey.

The analyst named three companies to own with the "most favorable risk/reward" profile going into the second half of 2021:

  • CyberArk Software, Ltd. (Nasdaq:CYBR)
  • Palo Alto Networks, Inc. (NYSE:PANW)
  • SailPoint Technologies, Inc. (NYSE:SAIL)

The CyberArk Takeaway

CyberArk is the market leader in the growing privileged access management space, said Fodderwala. The PAM space is an "increasingly strategic" market that focuses on differentiating access to data based on user privileges, mitigating threats to a company's most sensitive data if a hacker were to breach its network, said the analyst.

CyberArk continues to outpace peers as a leading market share gainer, with 30%-plus ARR growth forecasted through 2022 and room for multiple expansion considering, he said.

Morgan Stanley maintained an Overweight rating on CyberArk with a $200 price target. 

The Palo Alto Networks Takeaway

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