PANW stock was trading at $166.16 as of 01:04 PM EDT.
According to investment firm Wedbush Securities, increased government expenditure on cybersecurity is likely to be advantageous for software companies, including Palantir (NYSE:PLTR), Tenable (NASDAQ:TENB), and Palto Alto Networks (NASDAQ:PANW), among others.
Analyzing the market in-depth, analyst Dan Ives stated that previous data breaches, such as the well-publicized SolarWinds incident last year and the current attack on Uber (UBER), have highlighted the “huge effort” being made by the Biden administration to improve the nation’s software and cyber security. Ives mentioned the recently passed CIRCIA Act and the Bipartisan Cyber Incident Reporting Act of 2021 as being the driving forces behind increased spending in the area.
Ives stated in a note to clients that as the threat landscape and the bad actor and nation-state backdrop amplified by cyber warfare and crime continue to accelerate, federal spending has been forced to adapt and increase investment, providing an open opportunity for cybersecurity firms to take market share in the vast world of government contracts.
As the government remains vigilant about which contractors it works with and where they are likely to benefit, Ives pointed out that many spending initiatives are coming from within the Beltway, including the National Institute of Standards and Technology’s personnel, FedRAMP, the Cybersecurity, and Infrastructure Security Agency, and the General Services Administration.
The federal spending activity over the past few months was described as being “quite strong” by the analyst, who also pointed out that between 85% and 90% of the agreements the company is tracking have closed. He added that some federal cybersecurity budgets have increased by 35% to 40% from the previous year.
Consequently, organizations like Palo Alto Networks (PANW), Tenable (TENB), Zscaler (ZS), Fortinet (NASDAQ:FTNT), CrowdStrike (NASDAQ:CRWD), Palantir (NYSE:PLTR), Telos (NASDAQ:TLS), and CyberArk (NASDAQ:CYBR) are probably going to profit.
“We believe cyber companies are prepared for considerable growth, presenting a big land grab opportunity for well-positioned cybersecurity vendors with the proper products/value propositions that touch on the core pain points facing the government today,” Ives said. “With rising cyber budgets across all government verticals throughout 2022, including cybersecurity, firewall renewals, and vulnerability/threat management.”
PANW stock outlook
As Palo Alto Networks gets closer to the time for its next earnings release, Wall Street will be watching for encouraging signs. Earnings per share (EPS) are anticipated to be $0.68, up 23.64% from the same period last year. According to the Zacks Consensus Estimate for revenue, net sales will total $1.55 billion, up 24% from the same period last year.
Our Zacks Consensus Estimates anticipate $6.87 billion in revenue and $3.15 per share in earnings for the entire year, which would be increases of +25% and +24.87%, respectively, over the previous period.
Featured Image – Unsplash © Arif Riyanto