The cyber security industry is growing at a hectic pace and companies in the sector stand to benefit from it. I have been bullish on the likes of FireEye (FEYE, Financial) and Palo Alto Networks (PANW, Financial), and my bullish stance has proven to be profitable.
I am also bullish on CyberArk (CYBR, Financial) and consider it to be a good speculative play for long-term investors.
Recently, the company shared its fourth quarter earnings of 2015, which surpassed both the bottom and top line estimates. The annual guidance was also ahead of the consensus estimate on the top line, but earnings estimates came in just below the targets. Due to this, the stock reimburses post earnings with a decline of around 10%. This has created an opportunity in the stock as CyberArk’s model endures to be intact.
In the fourth quarter, CyberArk surpassed even the strongest estimates, beating an enthusiastic mark of 30 cents to 34 cents in non-GAAP net income per share by delivering 39 cents per share. This surge accounts for an increase of 105% over the previous year period. The company also beat analyst estimate for flat year over year growth.
CyberArk delivered fourth quarter revenue of $51.5 million, a surge of around 40% year over year, whereas yearly revenue was $160 million, an increase of 56% year over year.
A technology model shift
Hackers are finding new techniques to make their way into company security systems. Therefore, to keep up with the advancing threat background, cybersecurity technology has also developed. Instead of proposing prepackaged software via sellers, many vendors in the industry are generating their cloud-based solutions, which provide them a much more comprehensive view of what is truly going on. Centrally-hosted servers scrutinize over hundreds of petabytes of Web traffic data every month, progressing from formerly known virus signatures to efficiently identify other distrustful behavior in advance.
By offering a persistent flow of useful data, the cloud-based solutions are also permitting vendors to modify their business models. This also allows them to prolong their relationships with clients and generate periodic subscriptions. These periodic top-line streams are highly lucrative.
Adoption of behavioral analytics accounts for major technology trend in the cybersecurity industry. The same method is used by most of the cyberattacks. This method is starting to become more familiar, and security counter to it is becoming more mechanical.
One other major technology trend in the industry is the adoption of behavioral analytics. Many cyberattacks follow the same basic formula. This formula is becoming more recognizable, and protection against it is becoming more automated. By grouping artificial intelligence, predictive analytics and tons of data, cybersecurity clients are enhancing their capability to save themselves from hackers before it is too late.
Conclusion
The cyber security market is clearly growing and the companies in the sector will definitely benefit from it. I have been bullish on the likes of FireEye and Palo Alto, but due to the reasons mentioned above, I think CyberArk is also a great speculative play.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
