• War in Ukraine also of great relevance to the stock exchanges
• Cyber security could receive an additional boost
• Microsoft shares & Co. in focus
The Russia-Ukraine conflict is currently preoccupying the world and has long since arrived on the global stock markets. There is a lot of nervousness, the share prices are on a rollercoaster ride.
Russia also attacks in cyberspace
Against this background, however, the market for IT security could become more relevant and drive up the prices of cybersecurity stocks, because Russia is not only attacking in the real world, but also in cyberspace. The websites of the Ukrainian government and banks in the country were temporarily paralyzed. Malicious programs were also deployed, and more and more warnings are being given about cyber attacks. “Unfortunately, with the historic move by the US, Europe and Canada to remove select Russian banks from the global financial and messaging system SWIFT, and the sanctions imposed by the Central Bank of Russia, we now anticipate a significant increase in cyberwarfare by Russian nation-state-backed organizations in the coming weeks targeting various US and European companies and government agencies,” quoted MarketWatch Wedbush analyst Dan Ives.
According to the consulting company Fortune Business Insights, the global market for IT security amounted to around 166 billion US dollars last year, and annual growth of 12 percent to almost 366 billion US dollars is expected by 2028. In view of the currently escalating conflict, however, this forecast is now likely to be outdated, believes Ives: “With a significantly increased level of cyber attacks now looming on the horizon, we believe that additional growth tailwinds for the cybersecurity sector and well-positioned providers a focus sector for tech investors during this market turmoil,” reads CNBC’s assessment of the analyst.
Microsoft stock: IT security of great importance
For example, Microsoft shares could experience an upswing as a result of the Ukraine war. A share of the US group on the NASDAQ currently costs 289.86 US dollars. Although a price loss of around 13.8 percent has been observed since the beginning of the year, the analysts surveyed by Bloomberg see an average upside potential of 27 percent (as of the closing price on March 4, 2022).
“Microsoft is a leader in cybersecurity. We take our responsibility to make the world a safer place seriously,” the company’s website says. In 2020, Microsoft was able to generate 10 billion US dollars in sales in this area, which corresponded to growth of more than 40 percent compared to the previous year. The group is also making various acquisitions in the field of IT security, for example in the middle of last year it took over RiskIQ, a company for the management of security threats.
Palo Alto Networks – “World’s Leading Provider of Cybersecurity Solutions”
In addition to Microsoft, according to Ives, the shares of Palo Alto Networks could also experience new interest from investors. The company describes itself on its website as “the world’s leading provider of cyber security solutions”. Palo Alto Networks carries out real-time monitoring of data traffic for companies and public authorities, which means that hacker attacks, unauthorized access, etc. can be immediately detected and repelled. Regarding the Ukraine war, the company writes: “Palo Alto Networks is closely monitoring the rapidly evolving cyber activities related to Russia and Ukraine. We continue to release new Unit 42 threat data, provide protections to our customers and actively work with our partners industry and governments come together to share our analysis and insights based on our global threat network. Protecting our customers is our top priority.”
Palo Alto Networks shares are currently worth $557.51 on the NASDAQ and have hardly moved since the beginning of the year (as of the closing price on 03/04/2022). Thirty-four out of 38 analysts polled by Bloomberg recommend buying the stock, with an average price target 15 percent above current levels.
Fortinet stock with potential
Fortinet is a cyber security platform that develops and sells software, appliances and services in the field of IT security – including firewalls and antivirus programs. With more than 500,000 customers, including the US technology exchange NASDAQ, Siemens and Panasonic, Fortinet is one of the largest network security companies in the world.
The US company’s shares are currently worth $335.46 on the NASDAQ. Although they have lost around 6.6 percent of their market value so far this year, other analysts besides Ives see significant upside potential (status: closing price on March 4, 2022). For the full year, they expect sales to grow 29 percent, while earnings growth is likely to be 24 percent.
CrowdStrike stock – promising in the IT security space
CrowdStrike is a US information security and cybersecurity technology company. It uses AI (artificial intelligence) to detect malicious programs on end devices. The more customers CrowdStrike has, the more effective the security platform becomes, because if a threat is detected at one customer, the algorithm will protect all other customers from this threat in the future. CrowdStrike’s customers include Sony and Credit Suisse, among others. The company is one of the “most promising candidates in the field of IT security”.
CrowdStrike shares are currently trading at $179.03 on the NASDAQ and have fallen about 12.5 percent since the beginning of this year. Still, about 90 percent of analysts polled by Bloomberg gave the stock a “buy” rating, with an estimated upside potential of 48 percent over the next 12 months.
However, if the risk of individual stocks is too high, Ives advises that you could invest in various ETFs. The iShares Digital Security ETF, the Legal & General Cyber Security ETF or the First Trust NASDAQ Cybersecurity ETF would be particularly suitable.
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