Business enterprises have accelerated their digital transformation programs and changed IT priorities in response to the COVID-19 pandemic, which has increased their cyber risk exposure by virtue of the heightened cyber usage it has compelled. According to a survey conducted by Check Point Software Technologies Ltd., 71% of security professionals have reported an increase in security threats or attacks since the beginning of the coronavirus outbreak.

The increasingly complex  threat environment has necessitated the institution of multi-layered risk-mitigation strategies by organizations to  secure cloud workloads and endpoints. This has significantly benefitted cybersecurity stocks. This is evident in the Global X Cybersecurity ETF’s (BUG) 59.2% returns over the past year. Moreover, because the U.S.  is currently dealing with one of the worst cyber-attacks in its history, the demand for proper cybersecurity has hit record highs, with people and businesses taking extra precautions.

With corporate networks now spanning offices and homes, we expect companies like CrowdStrike Holdings, Inc. (CRWD) and Check Point Software Technologies Ltd. (CHKP)  to deliver promising returns this year.

CrowdStrike Holdings, Inc. (CRWD)

CRWD is a global cyber security leader in redefining security for the cloud era with an endpoint and workload protection platform built to stop breaches. CRWD’s Falcon platform leverages cloud-scale artificial intelligence (AI) and offers real-time protection and visibility across the enterprise, preventing attacks on endpoints on or off the network.

CRWD became a launch partner for AWS Network Firewall in November to deploy essential network protections and further deepens the technical collaboration with AWS. This integration will allow organizations to implement a modern enterprise security approach where network-layer protection works in conjunction with cloud workload protection controls to defend against sophisticated threat activity.

CRWD’s total revenues have increased 85.8% year-over-year to $232.46 million in the fiscal third quarter ended October 31, 2020. Its gross profit has risen 94.8% from the year-ago value to $170.93 million, while its non-GAAP EPS has increased 214.3% from the same period last year to $0.08.

Analysts expect CRWD’s revenues to grow 63.9% year-over-year to $249.35 million in the fiscal fourth quarter ending January 31, 2021. The consensus EPS estimate of $0.08 for the current quarter indicates a 500% improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in three of the trailing four quarters. The stock has gained 250% over the past year.

How does CRWD stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Peer Grade

A for Overall POWR Rating.

Check Point Software Technologies Ltd. (CHKP)

CHKP is a leading provider of cyber security solutions to governments and corporate enterprises globally. CHKP operates a multilevel security architecture with advanced threat prevention system, which defends enterprises’ information on  cloud, network and mobile devices.

On December 29, CHKP announced a partnership with OMNIQ Corp. to offer CHKP’s ZoneAlarm security software in tandem with OMNIQ’s supply chain mobility solutions for its multi-industry customer base, including Fortune 500 companies. This partnership will add multiple layers of data protection for customers through a powerful antivirus and firewall with anti-ransomware and anti-phishing capabilities.

On November 9, CHKP introduced a unified cyber security platform, Check Point R81, to deliver autonomous threat prevention. The platform will enable IT staff to simplify threat management and manage the most complex and dynamic network environments easily and efficiently.

CHKP’s total revenues have increased 6.2% year-over-year to $289 million in the third quarter ended September 2020. Its non-GAAP operating income has risen 7.5% from the year-ago value to $265 million, while its non-GAAP EPS has increased 13.9% from the same period last year to $1.64.

Analysts expect CHKP’s revenues to grow 2.2% year-over-year to $555.61 million in the fourth quarter ended December 31, 2020. A consensus EPS estimate of $2.11 for the fourth quarter represents  a 4.5% improvement year-over-year. The company has an impressive earnings surprise history; it beat the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 12.2% over the past year.

CHKP is rated a “Buy” in our POWR Ratings system. It has an “A” for Trade Grade and a “B” for Buy & Hold Grade. In 25-stock Software – Security Industry, it is ranked #14.

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CRWD shares were trading at $221.00 per share on Thursday afternoon, down $5.33 (-2.35%). Year-to-date, CRWD has gained 4.33%, versus a 2.75% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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