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A Bank of America analyst reflected on the cybersecurity sector after having discussions with key partners and VARs across the industry.
A key takeaway from these discussions is that spending slowdowns have already started. This is mostly associated with mid-sized enterprises and SMBs while the large enterprises have shown no signs of a slowdown, although this may change too soon.
“We note that partners believe larger enterprises may also reduce budgets, yet this might only happen starting next year. On specific areas within security, endpoint solutions, Cloud security and privileged access management seem to be more resilient areas, while distributors expect to see some slowdown in IAM and VM,” the analyst said in a note.
Overall, Microsoft (NASDAQ:MSFT) is seen as a beneficiary in multiple areas given its “bundle offerings.”
As far as sectors are concerned, the analyst notes strong demand for endpoint security, which should benefit SentinelOne (NYSE:S) and CrowdStrike (NASDAQ:CRWD).
“We see SentinelOne and CrowdStrike in different segments of the market, with SentinelOne benefiting from a 10-20% price advantage in the mid-market, while CrowdStrike wins with larger enterprises on product breadth, typically having much larger deals than SentinelOne,” he added.
As far as cloud security is concerned, Zscaler (NASDAQ:ZS) and Palo Alto Networks (NASDAQ:PANW) are seen as “clear winners.”
“Zscaler has been successful in displacing legacy solutions, with resellers noting a strong partnership ecosystem, while Palo Alto is successful with companies that are not yet fully cloud-native and still utilize firewalls. Additionally, Palo Alto is benefiting from the ability to cross sell into the existing customer base,” the analyst concluded.
