Cybersecurity stocks finished higher Friday after strong earnings from Okta Inc. and Palo Alto Networks Inc., adding to solid gains over the past year following the disclosure of a massive data breach at Equifax Inc.
On Friday, big gains in shares of identity management services company Okta Inc. OKTA, +19.47% and threat detection and prevention company Palo Alto Networks Inc. PANW, +3.29% drove a rise in exchange-traded funds that track the industry.
Both the ETFMG Prime Cyber Security ETF HACK, +0.70% and the First Trust NASDAQ Cybersecurity ETF CIBR, +0.18% finished up 1.2% Friday, compared with a 0.2% decline in S&P 500 index SPX, -0.22% and a 0.3% slip in the tech-heavy Nasdaq Composite COMP, -0.25%
Okta shares surged to close at a record $71.32 Friday, after touching an all-time intraday high of $75, after the company reported better-than-expected quarterly results late Thursday.
Seven of the 13 analysts who cover Okta hiked their price targets, resulting in an average $72.36 price target for the stock, according to FactSet data. Of the analysts who cover Okta, 11 have buy or overweight ratings and two have hold ratings.
Okta’s most bullish analyst, J.P. Morgan’s Sterling Auty, raised his price target to a Street high of $88 from a previous $63.
“The stock is expensive, and has been for some time,” Auty said in a note. “Based on the quarterly performance the company keeps putting up it appears it is worth every penny.”
Auty noted that billings at Okta grew nearly 53% on the quarter to $109.4 million, ahead of his above-consensus estimate of $100.3 million, and that the company added a record 450 customers during the quarter.
Palo Alto shares closed up 3.3% at $227.61, after touching an all-time high of $234.45, after earnings beat Wall Street estimates late Thursday and 21 out of the 38 analysts who cover the stock hiked their price targets, resulting in an average price target of $247.91, according to FactSet data.
Of the analysts who cover Palo Alto, 28 have buy or overweight ratings, eight have hold ratings and two have sell or underweight ratings. J.P. Morgan’s Auty also took the honors of having Wall Street’s most bullish price target on Palo Alto Networks at $282, up from his previous $239.
Jefferies analyst John DiFucci, who has a buy rating on Palo Alto and hiked his price target to $267 from $239, said that he believes the company is “well positioned as a true security platform play that is providing consolidated solutions the way enterprise customers would prefer to buy them.”
“New business metrics were strong for the fourth quarter, including 20% growth in New Workload Products Sales (excluding our estimate of refresh sales), and strong growth in New Subscription ACV (Annual Contract Value) and New Product ACV of 44% and 29%, respectively,” DiFucci said.
Of note, shares of cloud-based cybersecurity company Zscaler Inc. ZS, +9.98% closed up 10% at $46.05 on Friday following strong results late Wednesday.
On the whole, Friday’s gains add to an already strong year for cybersecurity stocks after Equifax EFX, +0.11% disclosed on Sept. 7, 2017 a massive hack of its databases.
Over the past 12 months, the ETFMG Prime Cyber Security ETF has gained nearly 35%, while the First Trust NASDAQ Cybersecurity ETF has risen more than 31%, compared with a 16% advance in the S&P 500 and a 24% rise in the Nasdaq.
Over that time, some of the biggest gainers in the cybersecurity space have been shares of Everbridge Inc. EVBG, -0.85% with a 167% surge, Okta with a 165% rally, Fortinet Inc. FTNT, +0.61% with a 129% gain, Varonis Systems Inc. VRNS, +0.68% with a 92% rise, CyberArk Software Ltd. CYBR, +0.69% with a 86% gain, while both Qualys Inc. QLYS, +0.95% and Splunk Inc. SPLK, +1.56% have risen 83%.
Among the worst performing stocks over the past 12 months are Symantec Corp. SYMC, +0.10% with a 35% drop, FireEye Inc. FEYE, +1.31% with a 2.2% decline, Juniper Networks Inc. JNPR, -0.69% with a gain of 1.8%, Imperva Inc. IMPV, -0.11% with a 3.5% gain and Check Point Software Technologies Ltd. CHKP, -0.10% with a 3.6% rise.
