The outlook looks strong for the security software sector despite near-term macro headwinds, Goldman Sachs analyst Gabriela Borges asserted Tuesday in a 90-page research report picking up coverage of the group.
“We see several industry dynamics that are favorable for long-term investors,” she writes in the report.
Among other things, she asserts that the industry has shifted to multi-product portfolios, reducing a historic tendency toward boom-and-bust product cycles. And she says the industry’s cyclicality is tempered by a shift away from hardware and toward software-as-a-service.
She also sees natural extensions for the industry’s incumbents, including edge and cloud security products. And Borges sees the industry benefiting from growing adoption of machine learning applications.
Borges cautions that in the near-term those positives will be partially offset by a more muted demand environment this year than in 2022, reflecting pressure from macroeconomic factors.
The analyst picked up coverage of nine stocks. She launched
CrowdStrike (ticker: CRWD),
Check Point Software (CHKP),
Fortinet (FTNT), and
Palo Alto Networks (PANW) with Buy ratings. Borges started
AvePoint (AVPT),
SentinelOne (S), and
Zscaler (ZS) with Neutral ratings. And she set Sell ratings on both
Cloudflare (NET) and
Okta (OKTA).
