Investors were drawn to cybersecurity stocks in 2016 in light of headline-making data breaches and a heightened demand for cloud and Internet of Things (IoT) protection. But at the same time, many cybersecurity stocks suffered from increasing competition, slowing sales growth and low profitability as they evolved to meet the demands of a disrupted sector.
While various stocks are set to benefit from a sustained and continuing demand for cybersecurity solutions, analysts, on average, see industry pioneers Symantec Corp. (SYMC) and Palo Alto Networks Inc. (PANW) as positioned to maintain their competitive edge into the new year.
Cybersecurity industry leader Symantec Corp. (SYMC) underwent a wide-scale restructuring over the past year in order to beef up its enterprise security and consumer security segments. The Mountain View, Calif.-based firm enhanced its flagship Norton Suite via two large acquisitions. In June, Symantec bought out cloud-based platform Blue Coat Systems, a specialist in enterprise security, and later acquired identity and fraud protection firm LifeLock Inc. (LOCK). In 2017, the tech company will continue to expand its Norton product for connected devices, announcing in early January a Norton Core product for smart homes. (See also: Behind Symantec’s Recent Buyout Spree.)
Palo Alto Networks Inc.
Despite a sales slowdown from multiple years of 35%-plus annual growth, Santa Clara, Calif.-based Palo Alto Networks is positioned to outrun rivals in the next-gen cybersecurity space. In order to secure long-term growth, Palo Alto has invested heavily into IoT and cloud-based applications, along with building out its recurring and long-term revenue streams with software and subscription-based businesses.
In late November, the firm announced a strengthened partnership with leading public cloud provider Amazon.com Inc. (AMZN), in which Palo Alto will help automate cloud security deployment as a wave of enterprises shift on-premise workloads to the cloud. As a testament to the firm’s advanced endpoint security solutions, the tech site CRN named Palo Alto the overall winner of the 2016 Product of the Year Award. (See also: Internet of Things Poses Massive Cyberthreat.)