If there is one area in technology that has growth and that has an area that is underspent, it is the world of data security and cybersecurity. On the heels of the RSA Conference 2015, Oppenheimer identified several key issues in cybersecurity and identified several of the key stocks on which it has Outperform ratings that are the most likely beneficiaries in this field.

Oppenheimer’s Shaul Eyal said that the 2015 RSA Conference had no new buzzwords, like advanced persistence threat (APT), as it did in 2014 and in 2013. Still, the strong underlying themes were said be quite intact. To show just how strong the attendance was for this data security conference, it was a record — some 50,000.

Oppenheimer’s key drivers for the bullish are driven by the following factors:

• Identity becoming the “new perimeter”
• Compliance and regulation (governments setting security legal frameworks)
• Automation
• Big Data/analytics to streamline IT operations and potential network vulnerabilities

The Oppenheimer report said, “We view companies under coverage as well positioned to continue to report strong results as fiscal year 2015 unfolds.”

Of Oppenheimer’s top picks in the data security space, 24/7 Wall St. highlighted the four key stocks in the report that have Outperform ratings: Check Point Software Technologies Ltd. (NASDAQ: CHKP), CyberArk Software Ltd. (NASDAQ: CYBR), Fortinet Inc. (NASDAQ: FTNT) and Palo Alto Networks Inc. (NYSE: PANW).

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Check Point Software

On Check Point, Oppenheimer has an Outperform rating. The firm said that discussions centered on the relative growth of the company versus the industry. The report said:

Recall that the first quarter of 2015 showed the continuation of the past nine quarters with Product & Subscription growth of 11% Year over year. We expect the growth to continue in the near term. Check Point represents the largest, pure-play network security vendor globally.

We view CHKP’s ability to offer customers a broad platform of solutions positively, as its portfolio of 40+ software “blades” enhances customer ROI and eliminates the need for multiple point solutions from a variety of different vendors. We believe the maturity of CHKP’s integration capabilities and core platform management functions enable it to retain share in more complex network environments, while its large international distribution channel and support systems strengthen its competitive position further.

Oppenheimer has a $90 price target on Check Point, which is more or less in line with the $90.57 consensus price target. The highest target is up at $100. Check Point shares are currently near $87.65.

CyberArk Software

CyberArk is rated Outperform at Oppenheimer. The report said:

CyberArk is the PAM pure-play publicly traded “big gorilla” with the most revenue and largest customer base. It is focused solely on privileged access management, so its business sales and marketing are dedicated to the problem and technical features aim to provide specific benefits in this area. We are positive on CyberArk’s ability to accelerate share gains across its solutions, outpacing peers. We believe that CYBR will continue to add important elements to its platform to differentiate itself from peers.

Oppenheimer has a $65 price target on CyberArk, while the consensus price target is down at $54.20, and the highest analyst target is up at $72.00. The current share price is $66.67.

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Fortinet

Oppenheimer sees Fortinet gaining share with higher performance speeds. It said:

Our discussions focused on the strong top-line growth the company has been experiencing. Results have been driven by Fortinet’s technology and higher performance speeds (via its proprietary ASIC design) and have traditionally been a key differentiator for its firewalls. The company continues to ramp Sales and Marketing spend (better vertical alignment) aimed at improving share gains in the US Enterprise space, and making inroads beyond the core SMB and service provider verticals where it has traditionally seen more strength. We believe Fortinet will continue to gain market share in an improving network security spending environment.

Fortinet is trading near $38.15. Oppenheimer has a $39 price target and the consensus analyst price target is $41.30.

Palo Alto Networks

Oppenheimer’s report showed that Palo Alto is benefiting from strong customer growth and adoption. The firm also called it a disruptor within the network security space, and that it will continue to gain market share. The report said:

Given its platform approach, Palo Alto can also combine multiple security functions (firewall, IPS, web filtering, etc.) into a unified solution that improves efficiency and total cost of ownership for customers. With cost pressures fueling demand for more integrated security platform, we continue to view Palo Alto as a key beneficiary of a broad shift toward more platform-based security operations.

Oppenheimer has a $175 price target for Palo Alto, about $20 higher than the current price and almost $10 higher than the consensus analyst price target.

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FireEye Inc. (NASDAQ: FEYE) was also mentioned positively in Oppenheimer’s report, but the firm only has a Perform rating on it.

Oppenheimer’s report from Monday had a lot of overlap with a UBS data security research report from Friday. After the company meetings at the RSA show, Oppenheimer still sees security spending acceleration. Among these additional drivers are the following:

• Governments placing the legal framework for battling cyberthreats
• Company boards being made more aware of cyber risks and directing management teams to add security measures
• Network complexity (cloud/BYOD)
• Market consolidation

Oppenheimer did say that identity is now the new perimeter. The firm has heard about the growing importance and need for identity management solutions. Users are accessing their applications and data from anywhere, anytime, with a myriad of devices, which bodes well for that extra identity layer — and bodes well for CyberArk.

Monday’s research report also highlighted that there is still a need for a first line of defense. It called this irreplaceable. The firm even sees companies expanding their portfolios through small tuck-in acquisitions. Companies are also said to be jockeying for leadership positions through increased R&D budgets and via mergers and acquisitions. Those beneficiaries here were listed as Palo Alto, Check Point and Fortinet.

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