You may think the time is right to move into cybersecurity stocks, if you’re reading this IBD investing primer.
Among new developments: consolidation may be coming in the cybersecurity industry. Okta (OKTA) in early March acquired privately held Auth0 in a $6.5 billion, all-stock deal. Also, Okta is expanding into new security markets vs. CyberArk Software (CYBR) and SailPoint Technologies (SAIL).
CrowdStrike Holdings (CRWD) in February bought cloud-based Humio for roughly $400 million. CrowdStrike expects upside from a cloud computing partnership with Amazon.
Also, Microsoft (MSFT) disclosed that its cybersecurity revenues top $10 billion annually. With 400,000 customers, Microsoft’s computer security franchise is growing at more than 40%, the company said. Microsoft could pressure more industry incumbents as it expands cloud-based security services.
Palo Alto Networks (PANW), meanwhile, told analysts it’s exploring a new “equity structure.” One option, analysts say, would be creating a tracking stock to unlock the value of the company’s cloud business. Provisionally called ClaiSec, Palo Alto’s cloud unit has new products using artificial intelligence. A decision may not come for six months.
Cybersecurity Stocks: Covid Pandemic Speeds Shift To Cloud Services
The big picture: the coronavirus outbreak and shift to remote work accelerated a shift to cybersecurity services delivered via cloud computing infrastructure. CrowdStrike and Zscaler (ZS) were among cloud-based security firms to get a boost.
Zscaler’s fourth-quarter earnings, revenue and billings topped expectations. Even if economies normalize in 2021, analysts expect corporate spending on cloud-based security to remain a priority.
Cybersecurity stocks rallied in mid-December amid reports that Russian hackers accessed U.S. government computer networks via network management software provided by SolarWinds (SWI). Government agencies and companies exposed to the “Sunburst” cyberattack continue to assess damage.
The rally in cybersecurity stocks has eased. The big questions: how much of a spending boost on network monitoring/threat detection will result from the SolarWinds breach and what cybersecurity stocks…