In late March, U.S. President Joe Biden advised companies to strengthen their cybersecurity, citing “evolving intelligence” suggesting that Russia is “exploring options for potential cyberattacks” in response to the economic sanctions imposed on the country.  

In general, cyberattacks have been on the rise since the pandemic accelerated the digital transformation of companies. Per Check Point Research’s 2022 Security Report, organizations experienced 50% more weekly cyber-attacks in 2021 than in 2020. This year itself, high-profile names like Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and Samsung have faced cyberattacks.  

Secular tailwinds of increased threats, a rapid shift to the cloud and higher security spending bode well for companies offering cybersecurity and risk management solutions.

With that in mind, we’ll use TipRanks stock comparison tool to place Zscaler (NASDAQ:ZS), CrowdStrike Holdings (NASDAQ:CRWD) and Palo Alto Networks (NASDAQ:PANW) against each other and see what Wall Street pros have to say about these prominent names in the cybersecurity space. 

TipRanks’ stock comparison tool enables us to compare up to 10 stocks across several parameters, including analysts’ consensus ratings, price targets, yearly gain and market capitalization. The tool also provides a chart comparing historical stock price performance for the selected tickers.  

ZS	Zscaler, Inc.	$222.65
CRWD	CrowdStrike Holdings, Inc.	$224.85
PANW	Palo Alto Networks, Inc.	$616.99

Cybersecurity Stocks: Zscaler (ZS)

Zscaler is a cloud-native cybersecurity company and one of the leading players in the zero-trust space. A zero-trust framework asserts that no user nor application should be trusted by default. The company has about 5,600 customers worldwide with an emphasis on larger organizations. 

In February, Zscaler reported a 63% year-over-year (YOY) rise in its second-quarter (Q2) 2022 revenue to $255.6 million. This marks the highest growth rate in three years. The top-line growth was “driven by continued demand” for the company’s Zero Trust security platform. Adjusted earnings per share (EPS) increased 30% to 13 cents.  

Despite the better-than-expected Q2 results, ZS stock tumbled in reaction to subdued Q3 earnings guidance. Also, Colliers Securities analyst Catharine Trebnick noted that the 59% growth in billings to $367.7 million reflected a deceleration compared to the growth rate of over 70% seen in the previous four quarters.      

For FY 2022, Zscaler expects revenue in the range of $1.045 billion to $1.05 billion compared to $673.1 million in FY 2021 and an adjusted EPS of 54 cents to 56 cents compared to 52 cents in FY 2021.  

Trebnick reaffirmed a Buy rating on Zscaler stock, but lowered the price target to $325 from $440 to reflect the compression in the industry’s multiples.  

The rest of the Street is cautiously optimistic on the stock, with a Moderate Buy consensus rating based on 19 Buys, five Holds and one Sell. The average Zscaler price target of $311.75 implies almost 30% upside potential from current levels.   

CrowdStrike Holdings (CRWD)

Leading cybersecurity provider CrowdStrike Holdings has grown rapidly over the years thanks to the wide acceptance of its cloud-native Falcon platform. Through organic growth and strategic acquisitions, the company’s subscription customer base expanded to 16,325 in FY 2022 (ended January 31, 2022), a 65% YOY improvement.  

Earlier in March, CrowdStrike reported stellar Q4 FY 2022 results, with revenue growing 63% to $431 million and annual recurring revenue up 65% to $1.73 billion. Additionally, the company added 1,638 net new subscription customers in the quarter. Overall, robust top-line growth and adjusted operating margin expansion drove a rise in Q4 adjusted EPS to 30 cents. 

Looking ahead for FY 2023, CrowdStrike expects revenue in the range of $2.133 billion to $2.163 billion compared to $1.45 billion in FY 2022 and adjusted EPS between $1.03 to $1.13 compared to $0.67 in FY 2022.  

Reacting to the Q4 results and upbeat guidance, Needham analyst Alex Henderson commented, “CrowdStrike demonstrated why it’s not just an End-Point Detection and Response product, but instead a scaled, elastic cloud platform capable of delivering a robust and extensive range of well-integrated Security capabilities spanning many adjacencies.” 

Henderson is confident about CrowdStrike’s long-term potential and believes that company is likely to generate growth of over 50% for the next several years and more than 30% in the longer term. The analyst also feels that the company’s operating margins should reach 20%-30% over the next three to five years.

Consequently, Henderson reaffirmed a Buy rating on CrowdStrike stock with a price target of $340.

Overall, CrowdStrike scores a Strong Buy consensus rating based on 21 Buys versus one Hold recommendation. The average CrowdStrike price target of $276 implies about 22% upside potential from current levels.  

Cybersecurity Stocks: Palo Alto Networks (PANW)

Palo Alto Networks provides cybersecurity solutions to several organizations across cloud, networks, and mobile devices. Over the past few years, the company has made several acquisitions that have helped it expand its portfolio beyond traditional firewalls to address the need for security solutions on the cloud.  

Solid cybersecurity demand, a hybrid work environment and the growing presence of organizations on the cloud drove a 30% rise in Palo Alto’s Q2 FY 2022 revenue to $1.3 billion. Adjusted EPS increased to $1.74. Both revenue and adjusted EPS topped analysts’ expectations. Also, active millionaire customers reached 1,077 in Q2, up 26% YOY.  

Palo Alto raised its full-year guidance following a strong Q2 and now expects FY 2022 revenue to grow between 27%-29% to $5.425 billion to $5.475 billion. It expects FY 2022 adjusted EPS in the range of $7.23-$7.30, compared to $6.14 in FY 2021.  

Highlighting the 32% rise in billings to $1.6 billion and upbeat Q2 results, Wedbush analyst Daniel Ives reiterates a Buy rating on Palo Alto stock and a price target of $630. The analyst concluded, “We believe this is a cloud cyber security re-rating story in motion and view Palo Alto’s stock as having a strong upward trajectory despite overall market jitters over the next year as the Street starts to fully appreciate the cloud transformation playing out under the hood.” 

A majority of analysts covering Palo Alto echo Ives’ bullish sentiment, with the stock having a Strong Buy consensus rating backed by 20 Buys and two Holds. The average Palo Alto price target of $640.78 suggests 3.71% upside potential from current levels.   

Conclusion on Cybersecurity Stocks

Zscaler, CrowdStrike and Palo Alto are all well-positioned to benefit from the growing demand for cybersecurity solutions. While the upside potential in Zscaler stock appears higher, it should be noted that this follows a significant selloff in the stock year-to-date.  

In comparison, CrowdStrike and Palo Alto stock have advanced around 10% so far this year. However, analysts see higher upside potential in CrowdStrike from current levels compared to Palo Alto.  

Also, a higher proportion of analysts covering CrowdStrike have a bullish stance on the stock compared to its other two rivals. All in all, these are some great cybersecurity stocks to invest in.

On the date of publication, Sirisha Bhogaraju did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Sirisha Bhogaraju has over 15 years of experience in financial research. She has written in-depth research reports and covered companies across various sectors, with a primary focus on the consumer sector. Sirisha has a master’s degree in finance.