SolarWinds Hack Opens Doors for Other Cybersecurity Stocks

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Dec 30, 2020 (Baystreet.ca via COMTEX) —
When FireEye (NASDAQ:FEYE) revealed it was a victim of a Russian hack, the stock slumped from around $16 to $14. And after SolarWinds (NYSE:SWI) posted the same news, the stock fell by more and failed to bounce back.

Investors seeking exposure to the cybersecurity sector should avoid FEYE at new highs. SWI stock looks like it is on sale, trading at a forward price-to-earnings ratio of around 15 times.

Since the extent of the damage from the hack is unknown, investors cannot quantify the liability that SolarWinds faces. The local, state, and federal levels of government are now exposed and will need to fix the security holes. SolarWinds issued a patch. Still, the government may seek other suppliers to mitigate ongoing risks.

Clients may switch to or rely more heavily on CrowdStrike (NASDAQ:CRWD).

Investors may continue bidding shares of CRWD higher. If government clients change the policy and stop the practice of storing any sensitive data on internet-connected devices, then stocks in the cyberspace sector may fall.

Your Takeaway

Watch the cybersecurity stocks for now. The long-term prospects are stronger than ever as cloud-based solutions proliferate.

COMTEX_377005619/2559/2020-12-30T07:00:27

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The MarketWatch News Department was not involved in the creation of this content.

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