TLDR
- Wedbush initiated coverage of the cybersecurity sector, giving outperform ratings to CrowdStrike, Palo Alto Networks, Rubrik, and Datadog
- CrowdStrike was named a top 12-to-18 month tech pick, with a $250 price target based on AI-driven platform strength
- Palo Alto Networks was added to Wedbush’s Best Ideas List with a $400 price target, citing 34% revenue growth year-over-year
- Check Point, Fortinet, Varonis, and Telos were all downgraded, though Fortinet and Varonis received higher price targets
- Wedbush flagged that cybersecurity budgets are being redistributed rather than expanded, concentrating on select platforms
Wedbush Securities kicked off coverage of the cybersecurity sector on September 11, rating several companies outperform while downgrading others. The firm sees AI as the driving force reshaping how companies spend on cyber defense.
Wedbush identified five key themes behind the shift in cybersecurity budgets: AI defense across the tech stack, vendor consolidation, data security, observability, and vulnerability management disruption. The firm noted that budgets are being concentrated rather than grown.
CrowdStrike Named a Top Tech Pick
CrowdStrike received an outperform rating and a $250 price target, which reflects the company’s recent 4-for-1 stock split. Wedbush called it one of its highest-conviction names in cybersecurity and a top tech pick for the next 12 to 18 months.
CrowdStrike Holdings, Inc., CRWD
The firm pointed to CrowdStrike’s Falcon platform and its role in AI-driven endpoint protection. Wedbush also cited the company’s work in agentic security and security operations center orchestration as areas of future growth.
CrowdStrike reported ARR growth of 25% year-over-year, with net new ARR up 51% year-over-year in its most recent quarter. The company also provided an early fiscal 2028 net new ARR growth guide of at least 20%, topping analyst estimates.
Palo Alto Networks was added to Wedbush’s Best Ideas List with a $400 price target. The firm called it the clearest platformization winner in cybersecurity. Revenue grew 34% year-over-year in fiscal 2026, and platformized deals grew 78% year-over-year to 2,500.
Rubrik received a $120 price target and was called the strongest cyber resilience play in public markets. The company posted 38% revenue growth year-over-year and net retention of 119%.
Datadog was rated outperform with a $275 price target. The firm called it the best-positioned pure-play for cloud-native observability. Revenue grew 36% year-over-year, its sixth straight quarter of acceleration.
Downgrades Hit Check Point, Fortinet, Varonis, and Telos
Check Point was cut to neutral with a reduced price target of $135, down from $160. Wedbush acknowledged the company’s ongoing transformation under its CEO but pointed to slowing growth heading into fiscal 2027.
Fortinet was also downgraded to neutral, though its price target was raised to $155 from $125. Wedbush said the stock’s roughly 100% year-to-date gain has already priced in a best-case outcome.
Varonis was downgraded to neutral with a raised price target of $46. Wedbush sees the company as well-positioned for agentic AI and data security but said growth still lags peers.
Telos received the harshest call, cut to underperform with a price target of $5. The firm flagged concerns about variability in federal contracts and early adoption of the company’s Xacta.ai platform.
CrowdStrike shares edged up around 0.5% in early trade on September 11, while Check Point and Fortinet each slipped slightly.
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