Cybersecurity Stocks Often Make Investors Wanna Cry -- Heard on the Street
May 15 2017 - 4:14PM
Dow Jones News
By Dan Gallagher
Cybersecurity investors would do well to remember that buying on
the bad news isn't typically the safest play.
Several security stocks got a strong boost Monday following the
huge malware attack dubbed "WannaCry" that circled the globe over
the weekend. Proofpoint Inc. and FireEye Inc. each had jumped 9% by
Monday afternoon, while Palo Alto Networks, Fortinet Inc. and
Symantec Corp. each gained about 3%. Cisco Systems Inc., which now
generates more than $2 billion a year in revenue from its security
business, was also up nearly 3%.
It isn't the first time a high-profile attack has spurred
speculation. But security spending is already a high priority for
corporate executives, so the shock value of such episodes generally
doesn't alter budgets in a significant way.
The threat is growing, of course. The number of successful hacks
or malware infections on businesses and other organizations by
outside parties totaled 300 last year compared with 129 the year
before, according to the Privacy Rights Clearinghouse. Before the
weekend, more than 100 such attacks had been logged this year
Yet the sharp rise in cyberattacks over the past two years
hasn't translated into strong returns for investors. Of the stocks
mentioned above, only Proofpoint and Symantec have outperformed the
Nasdaq Composite in that time. Proofpoint provides email security,
and likely would benefit most from increased spending in this area
given that email is the most common means of entry for malware. But
it also trades around 137 times forward earnings, which is a fairly
high price to command in a sector that hasn't always given
investors what they have paid for.
Write to Dan Gallagher at dan.gallagher@wsj.com
(END) Dow Jones Newswires
May 15, 2017 15:59 ET (19:59 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cisco Systems (NASDAQ:CSCO)
Historical Stock Chart
From Apr 2023 to Apr 2024