We recently compiled a list of the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where OneSpan Inc. (NASDAQ:OSPN) stands against the other undervalued cybersecurity stocks.
With businesses facing a significantly complex cyber threat landscape, it is of utmost importance to stay ahead of trends in cybersecurity. Industry experts believe that, in 2025, the integration of AI in threat detection and acceleration in post-quantum encryption should define the landscape of the broader cybersecurity industry. Splashtop reported that the transition to a Zero-Trust framework demonstrates a significant shift in cybersecurity, emphasizing continuous verification and minimal access to enhance overall network security.
Global X Cybersecurity ETF saw an increase of more than 20% over the past year. What has led to this rally? Given the recent adoption of AI technology, market experts believe that the need for cybersecurity is significantly important. With several companies integrating GenAI into their operations, there has been a significant increase in cyberattacks. This led to increased demand for product offerings of cybersecurity companies.
Cybersecurity Industry- The Road Ahead
As per Fortune Business Insights, the global cybersecurity market size was pegged at US$172.24 billion in 2023. This market should grow from USD 193.73 billion in 2024 to USD 562.72 billion by 2032, demonstrating a CAGR of 14.3%. Furthermore, the US cyber security market should see strong growth, touching an estimated value of US$166.73 billion in 2032. This should stem from an increased number of e-commerce platforms. The strong adoption of enterprise security solutions in manufacturing, BFSI, and healthcare should fuel market growth up to 2032.
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Prevention of Cyberattacks
As per EIN Presswire, the quicker expansion of the Internet of Things (IoT) offers a significant opportunity for the broader cybersecurity market. As IoT devices—which range from smart home appliances to industrial sensors— become critical to business operations, there seems to be an increased requirement for effective cybersecurity measures. Several devices often lack strong security protocols. This leads to hacking, unauthorized access, and exploitation.
EIN Presswire added that, amidst these challenges, the cybersecurity industry has a unique opportunity to develop specialized solutions established to secure the IoT ecosystem effectively. This might consist of implementing advanced encryption protocols to protect data transmission, and developing device authentication mechanisms so that only authorized devices can connect to the network. Also, intrusion detection systems can be deployed tailored to monitor and protect against threats related to interconnected devices.
NGFWs (Next Generation Firewalls) protect against evolving practices that use AI to bypass traditional defences, as per Juniper Research. It added that the network layer is the most critical element of IoT networks to protect, with more than 45% of global cybersecurity spending inclined towards protecting the network layer in 2025.
Our Methodology
To list the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds, we sifted through numerous online rankings and combed through cybersecurity-focused ETFs, such as First Trust NASDAQ Cybersecurity ETF and Amplify Cybersecurity ETF. After getting an initial list of 25-30 stocks, we extracted the ones trading lower than the forward P/E of ~20.0x, as of November 20. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An executive in a meeting room surrounded by digital screens discussing data security requirements.
OneSpan Inc. (NASDAQ:OSPN)
Forward P/E as of November 20: ~12.8x
Number of Hedge Fund Holders: 18
OneSpan Inc. (NASDAQ:OSPN) offers software services. It is engaged in designing and developing security software and e-signature solutions that protect devices and financial transactions from fraud and misuse.
Wall Street analysts are optimistic about OneSpan Inc. (NASDAQ:OSPN)’s new solution, VISION FX. This new solution combines OneSpan’s patented CRONTO® transaction signing with FIDO2 protocols, strengthening the protection against phishing and account takeover threats (ATO). The changes in the banking sector related to new digital initiatives have resulted in unprecedented cybersecurity risks.
OneSpan Inc. (NASDAQ:OSPN) highlighted that digital fraud losses from attacks such as ATO are expected to exceed $343 billion globally between 2023 and 2027. Amidst this environment, banks of all sizes require sophisticated methods to protect accounts and transactions.
In Q3 2024, OneSpan Inc. (NASDAQ:OSPN)’s subscription revenue saw an increase of 29% YoY to $33.6 million. Industry experts believe that security subscription revenue is expected to surpass hardware revenue for the first time in 2024. Also, healthy demand for authentication and mobile application products should continue to aid its growth in subscription revenue for security solutions.
The company has made a strategic shift towards higher-margin software revenue and is focused on operational efficiency and profitability. These measures, together with OneSpan Inc. (NASDAQ:OSPN)’s emphasis on growing its partner ecosystem and expected growth in security subscription revenue, should place it well for efficient and profitable revenue growth.
Overall OSPN ranks 10th on our list of the most undervalued cybersecurity stocks to buy according to hedge funds. While we acknowledge the potential of OSPN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than OSPN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.