|Palo Alto Networks Inc: Best Stock in the Network Security Sector?|
Competition from Check Point Software Technologies ( CHKP), Palo Alto Networks ( PANW) and others is the main reason he’s cutting FireEye ( FEYE), writes Nowinski. There’s just too many firewalls now incorporating features that compete with the company’s capabilities:
The primary reason we are downgrading shares to Neutral is our belief that competition has increased for FireEye, whereby the top four firewall vendors (accounting for ~48% of the total firewall market) now have their own “sandbox” technology as shown below in Exhibit 1. As such, that leaves only 52% of the remaining market for FireEye to sell their advanced threat protection appliances into. Most recently, Check Point launched their “SandBlast” solution, which uses CPU-level threat detection to uncover threats at the “pre- infection” level. Cisco also has a strong solution in this space, with a focus on software upgrades rather than new appliances. Cisco recently hosted an investor call discussing their security portfolio and made it very clear that their customers do not want to “put another box behind the firewall” for advanced threat protection, which was a comment directed at FireEye. Instead, their customers would rather deploy software on top of their existing firewalls. Finally, Palo Alto continues to accelerate the adoption of their “Wildfire” technology, having over 7,000 total customers subscribing to it as of the end of FQ4(Jul).