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Security stocks were on the mind of Jefferies analyst Joseph Gallo on Thursday as he initiated coverage of Fortinet and Okta with largely upbeat views of Fortinet, Okta and Zscaler.

Gallo set a buy rating and $65-a-share price target on Fortinet (NASDAQ:FTNT), saying the company has a “rare blend” of growth and profitability. Gallo said Fortinet (FTNT) has one of the broadest arrays of products in the security industry, and stands to benefit from having a base of more than 500,000 customers.

Additionally, Gallo said Fortinet (FTNT) has also “managed the supply chain issues through the majority of the pandemic better than other [security] vendors.”

Gallo also set a buy rating on Okta’s (NASDAQ:OKTA), with a price target of $90 a share, despite the company dealing with “myriad issues” this year such as its own cyber-security incident and integration problems with its sales team.

With Okta (OKTA) shares down about 73% this year, Gallo said the company’s shares have been subject to an “overcorrection”, and that Okta (OKTA) “has a significant opportunity as it attempts to build out a complete identity platform.”

Gallo added that the identity and access management market, where Okta (OKTA) specializes, is “significant and underpenetrated” and in addition to being worth $24.1B this year, is expected to grow to $32.75B by 2023.

Gallo also set a hold rating on Zscaler (NASDAQ:ZS), with a $200-a-share price target on the company’s stock. Gallo said Zscaler (ZS), saying that while the company is “uniquely positioned to disrupt and potentially transform multiple IT network and security markets over the long term.”

Last week, Zscaler (ZS) got a big boost after the company reported better-than-expected quarterly results and gave an outlook that showed continuing growth in the coming months.


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