Is it possible that Wall Street could be underestimating the potential of the cybersecurity industry in 2022?
That's one of the opinions of Wedbush analysts Dan Ives and John Katsingris, who said that the "massive strength" of the cybersecurity space isn't getting the respect from investors that it deserves. And that there are too many factors in favor of cybersecurity providers to ignore next year.
"The threat landscape and bad actor-nation state backdrop continues to accelerate, coupled by an aggressive move by enterprises and governments to the cloud which has multiplied the threat vectors facing CIOs [chief information officers]," Ives and Katsingris said, in an look at the cybersecurity market for 2022. "This has created a massive land grab opportunity for those well positioned cyber security vendors with the right products [and] value proposition."
When it comes to specific companies in the cybersecurity industry, the analysts favorite picks for 2022 include Zscaler (NASDAQ:ZS), CyberArk Software (NASDAQ:CYBR), Varonis Systems (NASDAQ:VRNS), Sailpoint Technologies Holdings (NYSE:SAIL) and Fortinet (NASDAQ:FTNT), all of which have outperform ratings on their shares.
Ives and Katsingris said Palo Alto Networks (NASDAQ:PANW) and Tenable (NASDAQ:TENB) are their top two cybersecurity companies for next year, and also have outperform ratings on those stocks.
The analysts said it's no surprise what caused many large enterprises to reassess their attitudes about cybersecurity in their organizations.
"The Colonial Pipeline ransomware attack was ultimately the straw that broke the camel's back," for many companies that were in the middle of transforming their digital operations, wrote Ives and Katsingris. "attacks are increasing at an eye popping rate and we ultimately believe this is another broader sector growth catalyst for the cyber security industry over the next 12 to 18 months."
Ives and Katsingris also said the Biden Administration's Cyber Security Executive Order will likely provide a boost to cybertech companies, as the order is expected to result in more security spending by federal agencies. Additionally, companies offering cloud-based security are also set to see gains, as only 43% of current corporate workloads are in cloud environments. The analysts said that figure is poised to reach 70% by 2025.
"This is just the tip of the iceberg as the cyber warfare battle reaches a new level of threats for governments and enterprises alike," wrote Ives and Katsingris. "We believe there is a [moere than] $300 billion dollar growth opportunity in cloud cyber security alone [that's] up for grabs over the next few years."