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Investing.com -- JPMorgan analysts named six cybersecurity stocks worth considering on a pullback in a note Wednesday, splitting them into two categories: those with defensive characteristics and those with dislocated valuations following recent market weakness.
According to the firm, cybersecurity remains a top CIO spending priority and has been one of the more resilient areas within software, even as the broader sector has underperformed the S&P 500 year-to-date.
However, with ongoing market volatility, they feel investors may want to focus on names with strong fundamentals or valuation disconnects.
For defensive plays, JPMorgan highlights Check Point Software (NASDAQ:CHKP), Okta (NASDAQ:OKTA), and Tenable.
These stocks, according to the analysts, have “improving fundamentals, attractive levels of free cash flow valuation support, and potential to re-rate meaningfully higher with execution.”
On the other hand, JPMorgan sees valuation dislocations in Zscaler (NASDAQ:ZS), Cellebrite, and Varonis.
The firm notes that these stocks are well-positioned for fundamental acceleration and that concerns about their outlooks may be overdone.
While software stocks are entering a seasonally softer quarter, JPMorgan notes that earnings commentary suggests a stable macro environment with secular growth drivers intact.
The analysts acknowledge some concerns about government spending but argue that headwinds appear to be tied to temporary personnel shortages rather than budget constraints or deal cancellations.
JPMorgan’s report also tracks broader themes affecting the sector, including tariffs, FX fluctuations, and other macroeconomic trends.