12 Best Cybersecurity Stocks to Buy According to Analysts
In this article, we will be taking a look at the 12 best cybersecurity stocks to buy according to analysts. To skip our detailed analysis of the cybersecurity sector, you can go directly to see the 5 Best Cybersecurity Stocks to Buy According to Analysts.
AI in Cybersecurity: A Double-Edged Sword?
The technology sector has developed exponentially over the past few years, leading to an increasingly interconnected digital landscape. This is more the case in light of the rise of artificial intelligence (AI), as it has armed companies, individuals, and governments with an exceptionally effective technological arsenal. As a result, cybersecurity has become more pronounced regarding innovation and exposure to external cyber threats.
A fall 2023 article published by Deloitte, titled "AI in Cybersecurity: A Double-Edged Sword," highlighted the important role AI has come to play in the cybersecurity industry. The report noted that AI now offers the potential of bolstering digital defenses to make them stronger than ever before. For instance, a Zipdo survey cited by Deloitte has shown that 61% of enterprises believe they require AI technologies to detect breach attempts and that 69% of organizations surveyed believed they could not respond to critical threats without AI. However, AI is also capable of doing great damage if it falls into the wrong hands, in terms of "unleashing new forms of cyber threats." Deloitte noted several examples of AI-enabled cyber threats, including a 2023 instance when hackers used AI to get through Bitfinex's biometric authentication system. Fake video streams were injected into the verification process and succeeded in fooling the system into thinking that the videos were legitimate users. Through this endeavor, the hackers stole $150 million worth of digital assets such as Bitcoin, Ethereum, and Tether.
Mitigating the Risks
Despite the malicious use of AI in cybercrime, many still believe in the transformative capability of this technology in the cybersecurity industry, provided that certain steps are taken to mitigate the risks associated with AI in cybercrime. Deloitte recommended the establishment of policies and standards that could set the framework for responsible and secure AI usage, the development of a defensible security architecture that can protect AI systems from internal and external threats, and the implementation of tailored security solutions for AI.
As the situation stands at present, AI in cybersecurity is thus here to stay. From an investment standpoint, this can be an exciting opportunity. According to the Zipdo survey, by 2026, the global AI in cybersecurity market is projected to reach a grand total of $46.3 billion. Deloitte has also offered a projection for this growth, stating that the market, which was worth $17.4 billion in 2022, may hit a value of $102.78 billion by 2032, growing at a compound annual growth rate of 19.43% between 2023 and 2032. Additionally, Zipdo estimates that AI-enabled cybersecurity tech is expected to grow at an annual rate of 23.6% until 2027. Considering the impact of this technology in the cybersecurity space, 44% of the businesses surveyed reported that they are planning to invest in AI to improve their cybersecurity.
These figures may aid cybersecurity companies such as SentinelOne, Inc. (NYSE:S), Palo Alto Networks, Inc. (NYSE:PANW), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), among others, in growing exponentially in the years to come. Today, most renowned industry players in the cybersecurity sector are working to incorporate AI in their operations in light of these developments. Considering the above, we have compiled a list of the best cybersecurity stocks to buy now, according to analysts. Our list includes some undervalued cybersecurity stocks alongside some growth stocks in the cybersecurity industry as well.
Our Methodology
To select the names for our list of the best cybersecurity stocks, we consulted the holdings of the Global X Cybersecurity ETF and shortlisted the stocks based on their upside potential as of March 18. We calculated upside potential based on average analyst price targets for these stocks. Price target data was taken from Benzinga. The stocks are ranked based on their upside potential based on price targets, from the lowest to the highest upside potential. We have also mentioned the number of hedge funds holding stakes in the stocks by using Insider Monkey's hedge fund data for the fourth quarter. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by over 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Cybersecurity Stocks to Buy According to Analysts
12. Radware Ltd. (NASDAQ:RDWR)
Number of Hedge Fund Holders: 10
Average Analyst Price Target: $22
Upside Potential: 11.5%
Radware Ltd. (NASDAQ:RDWR) is a systems software company based in Israel. The company develops, manufactures, and markets cybersecurity and application delivery solutions for applications in cloud, on-premise, and software-defined data centers worldwide.
An Overweight rating and a $22 price target were maintained on Radware Ltd. (NASDAQ:RDWR) by Tavy Rosner at Barclays on February 8.
Radware Ltd. (NASDAQ:RDWR) had 10 hedge funds long its stock in the fourth quarter, with a total stake value of $113.6 million.
Like SentinelOne, Inc. (NYSE:S), Palo Alto Networks, Inc. (NYSE:PANW), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Radware Ltd. (NASDAQ:RDWR) is one of the best cybersecurity stocks to invest in according to analysts.
11. Cyberark Software Ltd (NASDAQ:CYBR)
Number of Hedge Fund Holders: 50
Average Analyst Price Target: $294.6
Upside Potential: 13.1%
At the end of the fourth quarter, RGM Capital was the largest shareholder in Cyberark Software Ltd (NASDAQ:CYBR), holding over 1 million shares in the company.
Cyberark Software Ltd (NASDAQ:CYBR) is another systems software company on our list of the best cybersecurity stocks to buy. It develops, markets, and sells software-based identity security solutions and services worldwide. The company is based in Israel.
Tal Liani, an analyst at Bank of America Securities, maintained a Buy rating and $315 price target on Cyberark Software Ltd (NASDAQ:CYBR) on March 15.
Our hedge fund data for the fourth quarter shows 50 hedge funds long Cyberark Software Ltd (NASDAQ:CYBR), with a total stake value of $1.6 billion.
10. OneSpan Inc. (NASDAQ:OSPN)
Number of Hedge Fund Holders: 17
Average Analyst Price Target: $12
Upside Potential: 16.7%
A Neutral rating and $12 price target were maintained on OneSpan Inc. (NASDAQ:OSPN) by analysts at DA Davidson on March 7.
OneSpan Inc. (NASDAQ:OSPN) is a cybersecurity company that designs, develops, and markets digital solutions for identity, authentication, and secure digital agreements. It is based in Boston, Massachusetts.
In the fourth quarter, 17 hedge funds were long OneSpan Inc. (NASDAQ:OSPN), with a total stake value of $94 million.
9. A10 Networks, Inc. (NYSE:ATEN)
Number of Hedge Fund Holders: 14
Average Analyst Price Target: $16
Upside Potential: 17.8%
Impax Asset Management was the most prominent shareholder in A10 Networks, Inc. (NYSE:ATEN) at the end of the fourth quarter, holding 775,000 shares in the company.
As of February 7, BWS Financial analysts hold a $17 price target and a Buy rating on A10 Networks, Inc. (NYSE:ATEN).
Based in San Jose, California, A10 Networks, Inc. (NYSE:ATEN) is a systems software company that offers networking solutions. It offers the Thunder Convergent Firewall, which can address multiple critical security capabilities, among others.
A10 Networks, Inc. (NYSE:ATEN) was seen in the portfolios of 14 hedge funds in the fourth quarter, with a total stake value of $74.2 million.
Richie Capital Group mentioned A10 Networks, Inc. (NYSE:ATEN) in its first-quarter 2023 investor letter:
“A10 Networks, Inc. (NYSE:ATEN) (ATEN down -11.1%) – The provider of cybersecurity and infrastructure solutions for on-premises, cloud and edge environments traded down during the quarter despite recording a record fourth quarter and full year revenue. The company still faces some challenges as they transition from a hardware focus to becoming software centric. Investors were likely concerned with ATEN’s negative growth in their enterprise segment. Despite near term headwinds, we view the company as an attractively priced cybersecurity market leader with attractive margins and high returns on capital. The company continues to outpace their peers in the Application Delivery Controller (ADC) market and expects double digit earnings growth for the full year 2023.”
8. Palo Alto Networks, Inc. (NYSE:PANW)
Number of Hedge Fund Holders: 77
Average Analyst Price Target: $335.2
Upside Potential: 18.9%
There were 77 hedge funds long Palo Alto Networks, Inc. (NYSE:PANW) in the fourth quarter, with a total stake value of $1.8 billion.
Palo Alto Networks, Inc. (NYSE:PANW) provides cybersecurity services worldwide. It offers firewall appliances and software alongside a security management solution for the global control of network security platforms as a virtual or physical appliance under the name of Panorama. The company is based in Santa Clara, California.
Stifel analysts maintained a Buy rating and a $330 price target on Palo Alto Networks, Inc. (NYSE:PANW) on March 13.
7. Rapid7, Inc. (NASDAQ:RPD)
Number of Hedge Fund Holders: 30
Average Analyst Price Target: $61.8
Upside Potential: 22.9%
Rapid7, Inc. (NASDAQ:RPD) is a systems software company based in Boston, Massachusetts. The company provides cybersecurity solutions under the Rapid7, Nexpose, and Metasploit brands.
Point72 Asset Management was the largest shareholder in Rapid7, Inc. (NASDAQ:RPD) at the end of the fourth quarter, holding 1.8 million shares in the company.
We saw 30 hedge funds long Rapid7, Inc. (NASDAQ:RPD) in the fourth quarter, with a total stake value of $377.1 million.
An Outperform rating and a $70 price target were reiterated on Rapid7, Inc. (NASDAQ:RPD) on February 8 by analysts at RBC Capital.
Like SentinelOne, Inc. (NYSE:S), Palo Alto Networks, Inc. (NYSE:PANW), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Rapid7, Inc. (NASDAQ:RPD) is among the best cybersecurity stocks to buy now.
6. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 62
Average Analyst Price Target: $394.4
Upside Potential: 24.6%
Cantor Fitzgerald analysts maintained an Overweight rating and a $400 price target on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) on March 14.
At the end of the fourth quarter, 62 hedge funds were long CrowdStrike Holdings, Inc. (NASDAQ:CRWD), with a total stake value of $2.6 billion.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cybersecurity solutions worldwide. It offers cloud-delivered protection of endpoints, cloud workloads, identity, and data. The company is based in Austin, Texas.
Baron Funds said the following about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its fourth-quarter 2023 investor letter:
“Improving unit economics: Many of our companies were able to significantly expand margins during 2023 even though revenue growth decelerated for some of them, showcasing the power of their capital-light, recurring revenue business models, and their increased focus on efficiency. Another example is the cybersecurity platform, CrowdStrike Holdings, Inc. (NASDAQ:CRWD), which is expected to increase its operating margins from 15.9% in 2022 to 20.8% in 2023 as a result of growing efficiencies, while the company’s platform offering is resonating with an increasing number of customers (for example, deals with eight or more modules grew 78% year-over-year in the last quarter), which is a tailwind to sales productivity.”
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Disclosure: None. 12 Best Cybersecurity Stocks to Buy According to Analysts is originally published on Insider Monkey.