Deutsche Bank initiates Netskope stock with Buy rating on cloud security leadership

Investing.com - Deutsche Bank initiated coverage on Netskope (NASDAQ:NTSK) with a Buy rating and a $25.00 price target on Monday, representing a 15% upside from the current price of $21.75, which trades near its 52-week low of $21.00.

The bank cited Netskope’s leadership position in redefining network security for the cloud and artificial intelligence era, noting it has become a vendor of choice for customers seeking advanced security at the network edge without compromising user experience. According to InvestingPro data, the company maintains a healthy gross margin of 69%, though it’s currently not profitable.

Deutsche Bank highlighted Netskope’s carrier-class network and comprehensive data security platform as key differentiators in the competitive Security Service Edge (SSE) market, with the latter being particularly important for securing generative AI applications.

The bank estimates Netskope is addressing a sizable $88 billion market opportunity by 2028, with the company currently in the "middle innings" of penetrating this market while investing in its field presence to maintain above-market growth.

Deutsche Bank projects Netskope will achieve mid-20% or higher annual recurring revenue growth with improving profitability over the next few years, though it acknowledged competitive risks in an increasingly mature core market against which the company is significantly increasing sales capacity investments. InvestingPro subscribers can access additional insights, including 3 more ProTips and detailed financial metrics to better evaluate Netskope’s growth trajectory.

In other recent news, several investment firms have initiated coverage on Netskope, highlighting the company’s growth potential in the cybersecurity sector. BMO Capital has given Netskope an Outperform rating, setting a price target of $26.00, while emphasizing the positive impact of artificial intelligence on the security sector. Piper Sandler also initiated coverage with an Overweight rating and a $28.00 price target, noting Netskope’s rapid growth and improved margins supported by its differentiated technology. Morgan Stanley joined with an Overweight rating and a $27.00 price target, citing Netskope’s potential for consistent 25-30% growth as it taps into the substantial SASE and AI security markets. JPMorgan has echoed this sentiment, initiating coverage with an Overweight rating and a $26.00 price target, highlighting the company’s position in high-growth security markets and the importance of API-based traffic. Additionally, RBC Capital has rated Netskope as Outperform with a $26.00 price target, pointing out the company’s strategic position in the SASE market following its recent public offering. These developments reflect a strong consensus among analysts regarding Netskope’s promising trajectory in the cybersecurity landscape.

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