Cyber Wars Are Good For Tech Businesses
The threat of a cyber attack always seems to loom large, as entities from Target to Anthem to the US Office of Personnel Management have fallen victim to security breaches. Even a car in motion is vulnerable to getting hacked.
The OPM breach, linked to Chinese hackers, reportedly exposed the personal information of over 21 million people who had been given a government background check.
The attack was soon followed by hints that the US might build out a Cold War-style cyber deterrence strategy that would discourage data breaches from abroad — lest they risk an aggressive retaliation.
As hackers mount their offensives, the comparatively young cybersecurity industry is booming. Today's Screen of the Day, Young Guns, focuses on stocks that went public fewer than 15 years ago — in particular, cybersecurity firms CyberArk Software and Palo Alto Networks.
Israel-based CyberArk Software, which has earned the highest possible IBD Composite Rating of 99, says it protects 40% of the Fortune 100 companies and 17 of the world's top 20 banks. Shares have shot up about 275% from its IPO at 16 last September and were up 5.4% in the stock market today. After breaking out of a cup-with-handle base in mid-April, the stock bobbed in and out of buy range before breaking support at its 50-day line in early July. Analysts expect CyberArk to bring in 6 cents in per-share earnings and $32.4 million in revenue when it reports Q2.
Palo Alto Networks, which says it works with more than 80 of the Fortune 100 companies, serves about 24,000 customers across 140 countries. It counts Aruba Networks (recently acquired by HP , Citrix, Splunk and VMWare among its strategic partners.
JPMorgan Chase initiated coverage of Palo Alto a few weeks ago at overweight with a 216 price mark. Analyst Sterling Auty believes the company has "ample upside," citing its potential to "grow revenue faster than 30% per year for more than five years in a row." The company reports Q4 results on Sept. 9. Shares were up 1.6% Wednesday.
Industry peer Qualys surged as much as 18% Tuesday after a Q2 earnings beat. Shares were rallying another 3% Wednesday. Fortinet raised its full-year guidance last month after coming out ahead of analyst forecasts, prompting a number of analysts to raise their price targets. Shares were up 2.4%.
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