As the COVID-19 pandemic accelerates the world’s pace of digital transformation, the threat of cyber-attacks is also increasing. The SolarWinds hack in December 2020, in which hackers broke into the systems of Fortune 500 companies and federal government agencies, highlighted the need for improved and advanced cybersecurity solutions to tackle growing cyber hacking incidents. According to Grand View Research, the global cyber security market is expected to grow at a CAGR of 10.9% over the next seven years.
Israel-based cybersecurity companies are known for their efficiency and global market dominance. In fact, in the first quarter of 2021, a number of start-ups in Israel’s cyber security sector raised a combined $1.5 billion in 17 separate financing deals. This placed Israel in second position in terms of investment in cybersecurity in the world.
As a result, we think it is wise to bet on Israel cybersecurity companies Check Point Software Technologies Ltd. (CHKP) and NICE Ltd. (NICE). They are well positioned to capitalize on the industry tailwinds.
Check Point Software Technologies Ltd. (CHKP)
Headquartered in Tel Aviv, Israel, CHKP is a leading provider of cyber security solutions to governments and corporate enterprises worldwide. The company offers a wide range of solutions that include network security, endpoint security, data security, and management solutions. The packages under which it offers its products are Next Generation Firewall, Next Generation Threat Prevention, Next Generation Secure Web Gateway and Next Generation Data Protection.
The company is scheduled to release its first quarter (ended March 31, 2021) financial results on April 26 before the U.S. markets open. CHKP’s revenue for the fourth quarter, ended December 31, 2020, increased 4% year-over-year to $564 million. Its non-GAAP operating income increased 1.8% year-over-year to $285 million. The company’s non-GAAP net income was $301 million compared to $299.30 million in the prior year period. Also, its non-GAAP EPS increased 7.4% year-over-year to $2.17.
Analysts expect CHKP’s EPS and revenue to increase 4.9% and 3.3%, respectively, year-over-year for the quarter ended March 31, 2021. It also surpassed consensus EPS estimates in each of the trailing four quarters.
On April 20, 2021, CHKP announced its results from the MITRE ATT&CK Endpoint Protection Product Evaluation. The company’s complete endpoint security solution, Harmony Endpoint, successfully detected 100% of the techniques used during the evaluations. Furthermore, Harmony Endpoint achieved the highest technique detection level for 96% of the unique techniques used in the evaluations. The results of the evaluations provide a level of assurance to customers who seek more reliability in protection from cybercrimes. . The stock has gained 17.7% over the past year to close yesterday’s trading session at $119.78.
CHKP’s POWR Ratings reflect this promising outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Value. Click here to see CHKP’s ratings for Stability, Growth, Momentum, and Sentiment.
CHKP is ranked #7 of 23 stocks in the Software-Security industry.
NICE Ltd. (NICE)
Based in Ra’anana, Israel, NICE is a global enterprise software provider. The company operates through two segments primarily, namely Customer Interactions Solutions, and Financial Crime and Compliance Solutions. It sells its solutions directly to customers and indirectly through selected partners as well.
The company’s $438.40 in non-GAAP net sales for its fiscal year 2020 fourth quarter (ended December 31, 2020) represents a 1.7% year-over-year rise. Its non-GAAP gross profit came in at $316.70, up 0.9% year-over-year, and its non-GAAP operating income was $131.70 million, which represents a 1.2% year-over-year increase. NICE’s non-GAAP net income also increased 4.2% year-over-year to $106.90 million. And its non-GAAP EPS was $1.61, up 1.9% year-over-year.
For the quarter ended March 31, the company’s EPS is expected to increase 11.2% year-over-year to $1.49. Its revenue estimate of $433.49 million for the quarter ending June 30, 2021 represents a 9.7% year-over-year rise. NICE also surpassed consensus EPS estimates in all the trailing four quarters.
On April 20, NICE launched CXone Expert, following its acquisition of MindTouch Inc. CXone Expert is a comprehensive artificial intelligence (AI) powered knowledge management solution that reduces friction by projecting personalized content to customers seeking self-service, while injecting crucial insights throughout the customer journey.
Overall, NICE is expected to witness increasing demand for its product thanks to its continuous product innovations. The stock has gained 46.4% over the past year and closed yesterday’s trading session at $235.31.
NICE’s strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Stability. Click here to see the additional POWR Ratings for NICE (Growth, Sentiment, Quality, Momentum, and Value).
NICE is ranked #25 of 119 stocks in the Software-Application industry.
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CHKP shares were trading at $121.05 per share on Thursday morning, up $1.27 (+1.06%). Year-to-date, CHKP has declined -8.92%, versus a 11.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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