US Market: Cybersecurity stocks extend advance on bets for robust demand

By: |
December 23, 2020 10:53 AM

After the recent cyber attack, Cybersecurity companies were seen as underlining the need for online protection services.

Cybersecurity Stocks, online protection services, Nasdaq, ETF, analystThere could be increased investment levels as government funding, compliance measures, and security investments become a larger focal point over a longer time.

Bloomberg: Cybersecurity companies mostly rose on Monday, outperforming the broader market as a sprawling, recent cyber attack was seen as underlining the need for online protection services.

The breach is likely to lead to elevated spending on security, analysts wrote, suggesting a powerful and long-term demand tailwind for the sector.

The hack “may be the tipping point that helps drive changes in governmental policies, compliance, and business responses, elevating cybersecurity to a societal level risk,” wrote Jonathan Ho, an analyst at William Blair. “This could result in increased investment levels as government funding, compliance measures, and security investments become a larger focal point over a longer time.”

The First Trust Nasdaq Cybersecurity ETF rose 0.8% on Monday while another exchange-traded fund that tracks the industry, the ETFMG Prime Cyber Security ETF, was up 0.5%. The S&P 500 Information Technology Sector fell as much as 2.1%.

The day’s move extends a recent stretch of outperformance for the industry. Over the past month, the First Trust ETF is up nearly 19% while the ETFMG fund is up more than 16%. The overall tech sector has risen 6.7% over the same period.

Among notable gainers, Okta Inc. rose 1.9%. Earlier, KeyBanc Capital Markets raised its price target on the stock to $313 from $282, with analyst Michael Turits writing that he had “increased confidence that cybersecurity spending will increase subsequent to the attack,” with Okta among the beneficiaries. He also raised his target on Palo Alto Networks Inc. to $391 from $350.

Mizuho Securities also named Okta and Palo Alto as potential beneficiaries of the hack, along with Crowdstrike Holdings Inc., CyberArk Software Ltd. and Zscaler Inc., among others.

Okta shares have more than doubled in 2020, while Zscaler and Crowdstrike have both soared more than 300%.

Looking to invest in US Stocks? Open a free account with Stockal - India's first borderless investment platform.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Time to get defensive in US stocks, interest rate hike may weigh on valuations; buy these sectors
2Is the correlation between Indian and US stock market low – Find out
3Money making ideas in US stock market! Here’s how to diversify portfolio in international stocks