What's Fueling Cybersecurity Stocks?

Analysts at FBR & Co. attended the RSA Conference 2015 in San Francisco this week and released a report summarizing what they learned. The key focus of the hundreds of vendors in attendance was the next generation of cybersecurity threats.

Increasing Demand

Analysts believe that recent demand for cybersecurity will likely continue to grow as businesses feel increasing pressure to upgrade dated systems and avoid reputational damage that can result from high-profile cyber-attacks.

Analysts mention Anthem Inc (NYSE: ANTM), Sony Corp (NYSE: SNE) and JPMorgan Chase & Co (NYSE: JPM) as three past victims of past cyber-attacks that suffered reputational damage as a result.

After speaking with key enterprise and government IT decision-makers, analysts predict about a 28 percent increase in security spending in 2015.

Related Link: 30 Cybersecurity Stocks In A Dangerous Digital World

Collaborative IT Environment

According to the report, a major theme at this year’s conference was the idea of convergence of security solutions, as opposed to a range of prevention offerings.

Analysts believe the new spirit of convergence and collaboration will lead to an increase in partnerships and M&A activity.

Right Products, Right Time

Analysts believe that there will be an intense fight for market share in the cybersecurity space in coming years, but they see several names as extremely well-positioned in the current environment.

They mention Palo Alto Networks Inc (NYSE: PANW), FireEye Inc (NASDAQ: FEYE), Fortinet Inc (NASDAQ: FTNT), Proofpoint Inc (NASDAQ: PFPT) and Check Point Software Technologies Ltd (NASDAQ: CHKP) as their top picks in the space.

The report also mentions large vendors such as Cisco Systems Inc (NASDAQ: CSCO) and Juniper Networks Inc (NYSE: JNPR) as likely market share losers in coming years.