Why We’re Well Positioned as Safety Concerns Make Headlines
High-profile cyberattacks will remind companies of the growing need for cybersecurity spending.
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*Recent, high-profile cyberattacks on Ticketmaster, AT&T and potentially Disney bode well for our CIBR shares
*Weekend safety concerns should do the same for safety and security spending, a positive for our Axon shares
*Why we’re watching F-35 deliveries this week and what it could mean for Lockheed
*Our take on reports suggesting Google may open its wallet for a cloud and cybersecurity company
Prompted by the attack on former President Trump and the string of very recent high-profile cyber attacks including Ticketmaster, AT&T T and, potentially, Disney DIS, safety and security are top of mind this morning.
We are positioned for this with our holdings in the First Trust Cybersecurity ETF CIBR and Axon AXON shares. Our position in Lockheed Martin LMT could also see some lift due in part to several fresh program wins announced after Friday’s market close.
We’re up roughly 30% with the portfolio’s position in CIBR shares, and while there is further upside ahead, it’s not enough to put fresh capital to work in the name, especially if we see the shares pop today. While we do think these very recent and very high-profile hacks will remind companies and investors that cybersecurity is an integral area of IT spending, we will want to see strong bookings from CIBR holdings such as CrowdStrike CRWD, Palo Alto Networks PANW, Cloudflare NET and Zscaler ZS before boosting our CIBR price target.
Axon shares remain a one-rated position, and for Lockheed shares, speculation is we should see the F-35 shipments start to return this week. If that is the case, it would be a nice catalyst for our LMT shares as it would signal improving revenue and EPS prospects for the coming quarters.
Getting back to the recent cyberattack headlines, we think they will be a wake-up call to management teams and the board room, but given their timing, the impact isn’t going to show up in the June quarter results for these companies. For the June quarter, those budgets were likely skewed toward AI, which will be a positive for our position in ServiceNow NOW.
Outside of CIBR, both Microsoft MSFT and Alphabet’s GOOGL Google have cybersecurity offerings as well. While they are far smaller than their respective core businesses, those efforts round out our cybersecurity exposure. And reports indicate Google is looking to grow its exposure to this area of spending with a potentially very large acquisition.
The reports suggest Google is in talks to acquire cloud and cybersecurity startup Wiz Inc for around $23 billion. With $111 billion on cash on hand exiting the March quarter, Google can easily fund this move, one that would help Google Cloud better compete with Microsoft’s Azure and Amazon Web Services. For now, these are just reports and we’ll want to wait for Google to formally announce any such effort, especially after the rumored buy of HubSpot HUBS recently fell apart. Compared to a HubSpot deal, we think the odds of Google going forward with Wiz are higher in part because Google made similar efforts in the past with its $5.4 billion purchase of cybersecurity firm Mandiant in 2022.
At the time of publication, TheStreet Pro Portfolio was long CIBR, AXON, LMT, NOW, MSFT and GOOGL.
