BofA lifts cybersecurity stock targets to reflect long-term growth outlook
Investing.com — Bank of America raised its price objectives for Cloudflare, Palo Alto Networks, SentinelOne and CrowdStrike, citing expanding cybersecurity valuations, accelerating artificial intelligence adoption and a stronger long-term growth outlook.
The brokerage expects each company to sustain revenue growth of roughly 20% or more. AI is increasing data volumes, expanding attack surfaces and making security systems more complex, supporting durable spending across the sector.
Leading platforms could benefit from rising demand for protection and the growing value of their data, automation tools and AI-based capabilities. The analysts increased their forward enterprise value-to-revenue and enterprise value-to-free-cash-flow multiples to reflect those trends.
Cloudflare’s price objective was lifted to $330 from $255, with its Buy rating retained. The new target applies a 33-times fiscal 2027 enterprise value-to-sales multiple, up from 25 times.
Its global network places the company across AI inference, application delivery, security and developer infrastructure. Momentum in Workers, developer services and AI offerings also supports a premium valuation.
Palo Alto Networks remained a Buy, with its target raised to $420 from $330. Its new valuation uses a 19-times calendar 2027 sales multiple, compared with 15 times previously.
Platform consolidation should benefit the company’s network, cloud and security-operations businesses. Expanding automation and AI capabilities could also increase its share of enterprise security budgets.
SentinelOne’s Buy rating was reiterated, with its target moving to $22 from $20. Its Singularity platform offers autonomous threat detection and AI-driven workflows, though its smaller scale and lower margins justify a discount to larger competitors.
CrowdStrike’s target rose to $230 from $187.50, but the stock retained a Neutral rating. Leadership across endpoint, cloud, identity and security operations supports its growth prospects, though those strengths are already reflected in a premium valuation.
The revised targets rely partly on continued sector multiple expansion. Slower product adoption, weaker customer growth, rising competition or a broader decline in investor appetite for highly valued software companies remain key risks.
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