FireEye share prices have appreciated by ~30% year-to-date
As we learned in a previous part of this series, FireEye (FEYE) cheered investors with its 1Q15 results before seeing its share prices fall May 5, 2015. Despite this loss, FireEye’s shares have appreciated by ~30% year-to-date.
In March 2015, Premera Blue Cross, a health insurer based in US, stated that up to 11 million customers are likely to be affected by a cyberattack that took place on the company in 2014.
The increase in cyber threats and network attacks have convinced companies to increase investments in security measures. Companies want to become proactive rather than responsive to the high-profile attacks.
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Scott Sacknoff, index manager for the SPADE Defense Index, believes that security software firms such as Palo Alto Networks (PANW), FireEye, CyberArk Software, Barracuda Networks, and Fortinet (FTNT) should benefit from this trend. Fortinet and Palo Alto are among the top five players in the security appliance market.
The above graph shows findings by Mandiant, a company that FireEye acquired in 2014 for $1 billion. Mandiant found that industries including business and professional services, government and international organizations, and health services used to represent a smaller portion of investigations. Recently, however, these sectors have emerged as major targets. In the retail sector, intrusions increased from 4% to 14%, and in media and entertainment, attacks declined from 13% to 8% in 2014.
Security breaches shine a light on the stocks in this space
Stocks in the cybersecurity space often attract attention whenever news and reports about new security breaches at governments and major corporations surface. In December 2014, FireEye’s Mandiant forensics unit was selected to put Sony’s network in order after it had been hacked. As a result, FireEye’s shares rose by more than 7% on December 19, 2014.
A cyberattack on Japan-based (EWJ) Sony Pictures (SNE) resulted in the company’s films, as well as the personal details of employees, being leaked online in November 2014. An article from verge.com states that the FBI had “very high confidence” that North Korea’s involvement in the Sony cyberattack resulted in “the most serious cyberattack ever made against US interests.”
According to research firm MarketsandMarkets, the demand for cybersecurity products is expected to reach ~$156 billion by 2019. In 2014, that figure was ~$95 billion. Research firm Gartner expects the global cybersecurity market to be worth $80 billion in 2015. So, FireEye can expect to see increased demand.
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