PANW vs. CYBR: Which Cybersecurity Stock is the Better Buy Now?

CyberArk (CYBR) is currently a stronger buy than Palo Alto Networks (PANW) due to its robust growth, strategic acquisitions like Venafi and Zilla Security, and innovation in AI-driven identity security, as evidenced by a 43.4% increase in sales and a 30.7% rise in non-GAAP EPS in the first quarter of 2025. In contrast, PANW faces near-term challenges including shortened contract durations and slowing revenue growth, with sales and non-GAAP EPS growth at 15.7% and 21.2% respectively, in the third quarter of fiscal 2025; CYBR's 2025 sales and EPS are expected to grow by 31.85% and 25.05%, respectively, significantly outpacing PANW's projected growth of 14.4% and 15.14%.

Analysis

CyberArk Software (CYBR) and Palo Alto Networks (PANW) are prominent U.S.-based cybersecurity firms benefiting from a growing market projected by Mordor Intelligence to achieve a 12.63% CAGR from 2025 to 2030. CyberArk is demonstrating significant momentum, particularly in identity security, bolstered by its $1.54 billion acquisition of Venafi and $165 million acquisition of Zilla Security, which expand its machine identity and governance capabilities. The company reported a 43.4% year-over-year increase in sales and a 30.7% rise in non-GAAP EPS for the first quarter of 2025, with Zacks Consensus Estimates projecting 31.85% sales growth and 25.05% EPS growth for the full year 2025. Innovations such as its Secure AI Agent solution are further enhancing its market position. In contrast, Palo Alto Networks, while a leader in network and cloud security, is facing near-term headwinds. PANW's revenue growth has decelerated to the mid-teen percentage range from the mid-20s in fiscal 2023, with Q3 fiscal 2025 sales and non-GAAP EPS growing 15.7% and 21.2% respectively. Challenges include shortened contract durations, a slower transition to its cloud-based AI platforms, and a shift in large deals from multi-year to annual payments, impacting top-line stability. Zacks Consensus Estimates for PANW's 2025 sales and EPS indicate increases of 14.4% and 15.14%, respectively. Year-to-date, CYBR shares have risen 17.8% compared to PANW's 8.5%. While PANW trades at a lower forward sales multiple of 12.6X versus CYBR's 13.71X, CYBR's premium reflects its stronger growth prospects and current Zacks Rank #1 (Strong Buy), compared to PANW's Zacks Rank #3 (Hold).

Key Decisions for Investors

• Investors should consider CyberArk's strong growth momentum, driven by strategic acquisitions and innovations in AI-driven identity security, as a compelling investment case, despite its higher forward sales multiple of 13.71X which is supported by superior growth projections.
• For Palo Alto Networks, investors should exercise caution due to current operational challenges, including decelerating revenue growth to the mid-teens and shortened contract durations, which may impact near-term stock performance despite its established market leadership.
• Given CyberArk's Zacks Rank #1 (Strong Buy) and significantly higher projected growth (31.85% sales, 25.05% EPS for 2025) compared to Palo Alto Networks' Zacks Rank #3 (Hold) and lower projections (14.4% sales, 15.14% EPS for 2025), a portfolio tilt towards CyberArk may be warranted in the cybersecurity segment.