Cybersecurity continues to be a hot topic as evidence grows that geopolitical disagreements will be settled online rather than the battlefield. In addition to nations, companies and individual increasingly demand internet security. While integrated internet security solution providers have performed well (YTD up 17% versus 11% Russel 1000), companies that specialize in automated security, analytics based on machine learning, are likely to lead the industry.
Palo Alto Networks (NYSE:PANW) jumped into the lead of this emerging trend with the 2017 acquisition of an Israel-based company called LightCyber.
PANW provides internet security solutions to business clientele. The company has a high proficiency in technology, and management has shifting their product strategy towards the new trend of machine learning analytics. The validity of the trend was supported by a similar move by Juniper Networks (NYSE:JNPR) to acquire online security firm Cyphort. PANW sales execution in the past had weighed on the stock, yet problems seem to have worked out as the firm finishing FY17 on a strong note. At the end of August thy reported 4Q and full 2017 results indicating that revenue is estimated to top the high-end of guidance by $23 million, while non-GAAP EPS guidance increased by $0.02. Subscriptions and support revenue surged 42% and product revenue rose 11%. The company added 3,000 new customers in 4Q17, increasing the base to 42,500.
Finally, we can see further consolidation in the sector, highlighted by IBM's (NYSE:IBM)'s purchase of Agile 3 Solutions, which will keep top names trading at a premium.