Demand for security software continues to grow, as corporations and governments around the world look to protect their precious data. From the looks of things, demand is growing and the second-quarter numbers could be outstanding.

A new research report from the enterprise software analysts at FBR points out that it appears from their recent checks in the field that closure rates on larger deals may have improved nicely during the June quarter. This could be a harbinger of good things for the whole security group, and it speaks to the firewall refresh that the FBR team believes is underway in the hot-hot areas of security.

The FBR team likes three market leaders, all of which are rated Outperform. They also spotlight three additional stocks that could be takeover candidates.

Check Point Software Technologies Ltd. (NASDAQ: CHKP) remains one of the top tech stocks to buy on Wall Street for a security presence, and the FBR analysts, like many on Wall Street, think Internet and data security is crucial. The company continues down the path of its Software Blade strategy and is arguably more candid about its installed base advantage where it will look to continue to consolidate product features within its platform and provide customers a superior cost of ownership. FBR has a $74 price target on the stock. The Thomson/First Call consensus target is $72.15. Checkpoint closed Tuesday at $67.29 a share.

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FireEye Inc. (NASDAQ: FEYE) was absolutely blasted in the withering spring tech sell-off for many reasons, including a rich valuation, continued deal making and insider lock-ups expiring. The stock finally bottomed in mid-May and has fought its way back smartly. FireEye recently announced the new release of FireEye Email Threat Prevention Cloud that adds the traditional email security features of anti-spam and antivirus protection to its advanced threat detection capabilities. The FBR price target is $70, and the consensus is at $47.06. FireEye closed Tuesday at $41.04.

Palo Alto Networks Inc. (NYSE: PANW) is leading a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber threats, and it boasted a staggering 46% year-over-year billing growth. Unlike fragmented legacy products, its security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content. FBR has a $90 price target, while the consensus target is $90.90. Shares ended trading Tuesday at $82.26.

The FBR analysts also feel that large technology companies with limited or no security software presence may be interested in acquiring three top security stocks. Given the key role advanced security technology is playing in the build-out of next-generation data centers/cloud computing shift, it is a reasonable scenario.

Fortinet Inc. (NASDAQ: FTNT) is a name starting to pop-up around Wall Street as a potential takeover target. The company announced last year a new high-performance, compact network firewall appliance for enterprise data centers, large service providers, cloud providers and carriers. Fortinet was the first network security company to deliver 100 Gbps+ firewall throughput and 40 GbE ports in a compact appliance. The stock is rated Outperform and FBR has a $28 price objective. The consensus target is $26.20. Shares closed trading Tuesday at $25.15.

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Imperva Inc. (NASDAQ: IMPV) came in at the high end of revenue estimates last quarter, but it still continues to lose money. The company’s products fill the gaps in endpoint and network security by directly protecting high-value applications and data assets in physical and virtual data centers. Many on Wall Street believe the stock is truly a “show-me” story, where it has to prove that product strategy and execution is back on track. The stock is not rated at FBR. The consensus price target is $33.82. Imperva closed Tuesday at $26.58.

Proofpoint Inc. (NASDAQ: PFPT) is one of the many small-cap names making a big splash in the cybersecurity field. Last year the company released the results of a survey conducted at two major information technology (IT) security conferences that indicated spear phishing, the precise targeting of malicious, email-borne attacks at specific organizations, continues to be a serious threat.

Proofpoint is a leading security-as-a-service provider that focuses on cloud-based solutions for threat protection, compliance, archiving and governance, and secure communications. Proofpoint provides patented technologies, and on-demand delivery systems to protect against phishing, malware and spam, to safeguard privacy and encrypt sensitive information, and to archive and govern messages and critical enterprise information. FBR rates the stock Outperform with a $49 price target. The consensus target is $42.54. Shares closed trading Tuesday at $39.16.

While takeover chatter is often just that, large technology companies understand the demand and dollars that the security field is driving. Corporations and government entities plain and simple cannot be without it. For large tech companies with huge piles of cash, an outright acquisition may make the most sense.

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