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Michael Vi
Funding agency Morgan Stanley famous that cyber safety corporations might not be “immune” to a worldwide financial slowdown like different areas of IT spending, however they’re “comparatively extra defensible” and bigger corporations, corresponding to Palo Alto Networks (NASDAQ:PANW), might even see much less of an influence than others.
A bunch of analysts, led by Hamza Fodderwala, famous that the most important cuts got here from corporations corresponding to Varonis Methods (VRNS) and Rapid7 (RPD), whereas the “greatest” third-quarter outcomes have come from these like CyberArk (CYBR) and Test Level Software program (CHKP), which have excessive publicity to Europe, the Center East and Africa, regardless of considerations a few recession in Europe.
“The most important estimate cuts in [the third-quarter] had been from smaller corporations promoting predominantly level merchandise, in our view,” the analysts wrote. “This aligns with our basic choice for leaning into consolidators, most of that are reporting off-calendar [such as] Palo Alto Networks (PANW) and CrowdStrike (NASDAQ:CRWD).”
The analysts added that corporations which are in a position to present profitability are being rewarded, with development prone to be slower subsequent 12 months than this 12 months. The analysts added that there are a number of corporations that might pivot to profitability, notably SentinelOne (NYSE:S), which the analysts mentioned might see a “re-rating” if the corporate had been to focus on breakeven free money move inside the subsequent 12 months.
They added that Palo Alto Networks (PANW) is the agency’s high choose, given its enticing valuation and the truth that free money move is rising at greater than 30%.
For Okta (NASDAQ:OKTA), the analysts famous the inventory is “possible nearing a backside at 3.5X EV/[calendar year 2023 revenues] (2.8X on [calendar year 2024]) on our under consensus forecasts and will doubtlessly re-rate on constructive margin commentary/outlook on their Analyst Day this week.”
Late final month, funding agency Cantor began protection on Palo Alto Networks (PANW) with an chubby score.
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