Cybersecurity's 2Q May not Satisfy Lofty Valuations

Dow Jones00:05

1205 ET - Despite a strong demand environment for cybersecurity services, investors should be cautious about valuations that have outpaced business realities, Morgan Stanley analysts write in a note. Their checks indicate that demand hasn't improved as quickly as valuations, especially for on-cycle reporters including Qualys, Rapid7, and Check Point Software Technologies. "With valuations having almost doubled off the bottoms post Q1, and on-cycle names unlikely to show material inflections, we lean more cautious heading into the on-cycle prints," the analysts write. They favor cybersecurity names that can benefit from AI-driven consolidation, including CrowdStrike and Palo Alto Networks, the latter of which they name their new top pick in the category. (elias.schisgall@wsj.com)

(END) Dow Jones Newswires

July 21, 2026 12:05 ET (16:05 GMT)

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