Investing.com -- Baird downgraded major cybersecurity stocks, Cloudflare Inc (NYSE:NET), CrowdStrike Holdings Inc (NASDAQ:CRWD), and Fortinet Inc (NASDAQ:FTNT), to "Neutral" given their stretched valuations.
Large-cap internet security stocks significantly outperformed in 2024, benefiting from strong growth and expanding profit margins, but recent sharp gains leave limited upside, Baird analysts wrote in a note.
“We now recognize that the relatively full valuations of larger/platform security stocks imply a more balanced risk/reward,” analyst at Baird said.
With preliminary 2025 guidance likely to be prudent, initial expectations could reset lower, posing near-term risk to high-multiple names. The brokerage highlighted concerns over macroeconomic uncertainty in Europe, trade risks, and foreign exchange volatility.
Cloudflare surged 29% year-to-date, trading at 22.5 times estimated 2025 sales, while CrowdStrike has rebounded 88% from its August low, nearing pre-incident valuation highs. Fortinet, up 61% in 2024, continues to outperform, but its price-to-free-cash-flow multiple is well above historical averages.
Baird said it prefers to wait for more attractive entry points in the cybersecurity sector.
Related Articles
Baird downgrades internet security stocks on valuation
Airline shares fall as oil prices climb on new tariffs
Pirelli holds firm on debt reduction targets amid US tariff threats
免责声明：投资有风险，本文并非投资建议，以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请，作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考，不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证，投资者应自行研究并在投资前寻求专业建议。