Security Software Back in Focus After Huge Equifax Hack Exposes Millions

It seems to happen about every six months: a massive hack puts millions of consumers and average citizens at risk as cyber thieves look to get their hand on private data. Last week consumer credit company Equifax reported it had been breached and sensitive data from as many as 143 million Americans was potentially exposed. The truly damaging news from this event is that the company apparently had invested in solid security and was still hit.

In a new research report, Stifel analysts point out that the hackers may have exploited Apache Struts, which is an open-source web application framework for developing Java EE web applications. The report said this:

Security researchers disclosed a newly discovered exploit affecting all versions of Apache Struts from 2008 that could grant perpetrators access to mission critical enterprise systems. Interestingly, in order to gain “backdoor” access, a hacker would simply need to enter a string of modified data into a search box or other hosted elements on the site (meaning they would only need a browser to leverage the exploit). While it remains yet unclear whether the hackers leveraged the most recently disclosed vulnerability (CVE-2017-9805), which would’ve made it a zero-day attack, or a vulnerability disclosed in March (CVE-2017-5638), we maintain a high degree of confidence that Apache Struts was the perpetrator’s point of entry.

We screened the Stifel security software universe and found four stocks rated Buy that may benefit from this massive attack going forward.

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CyberArk Software

This company had a red-hot IPO in 2014 and shares are down almost 20% since July but have rallied back off the lows. CyberArk Software Ltd. (NASDAQ: CYBR) claims it is the only security company focused on eliminating the most advanced cyber threats — those that use insider privileges to attack the heart of the enterprise. The company proactively secures against cyber threats before attacks can escalate and do irreparable damage. It is estimated that at least 35% of the Fortune 100 and 17 of the world’s top 20 banks use the software to protect high value information assets, infrastructure and applications.

CyberArk is a pioneer of a new layer of IT security solutions that protect organizations from cyberattackers that have evaded the network perimeter. CyberArk’s solutions secure organization’s critical assets dubbed privileged accounts, which are the keys to databases, industrial control systems, servers and applications, all of which house sensitive data. CyberArk’s software is focused on protecting these accounts, which are highly targeted in cyberattacks to disrupt networks and/or steal sensitive info.

The Stifel price objective for the stock is $55, and the Wall Street consensus target price is $48.72. Shares closed Monday at $42.09.

FireEye

This stock was on fire a couple of years ago but was absolutely eviscerated after missing earnings numerous times. FireEye Inc. (NASDAQ: FEYE) has been mentioned over the years as a takeover target, and trading 85% below highs that were printed this time three years ago, it may indeed be on the radar.

The company provides cybersecurity solutions for detecting, preventing, analyzing and resolving cyberattacks. The company offers vector-specific appliance solutions that provide threat protection from network to endpoint for inbound and outbound network traffic that may contain sensitive information.

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FireEye also offers Central Management System that provides cross-enterprise threat data correlation to identify and block attacks across multiple attack vectors. Its Threat Analytics Platform helps to identify and respond to cyber threats by correlating enterprise-generated security event data from any security product with real-time threat intelligence, and its Malware Analysis System helps to manually execute and inspect advanced malware, zero-day and other advanced cyberattacks embedded in files, email attachments and web objects.

The company reported solid second-quarter numbers in August, and the stock has rallied smartly from lows printed in March.

Stifel has a price target of $20 on FireEye, while the consensus target is $16.41. The stock closed Monday at $16.41.

Palo Alto Networks

This company was a momentum trader’s dream before crashing back to earth. Palo Alto Networks Inc. (NASDAQ: PANW) is helping to lead a new era in cybersecurity by protecting thousands of enterprise, government and service provider networks from cyber threats, and it boasts a staggering year-over-year billing growth. Unlike fragmented legacy products, its security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content.

Palo Alto Networks security platform has new features that were introduced to help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products, and, instead, expand breach prevention capabilities and boost operational efficiency.

The $180 Stifel price target is well above the consensus price objective of $158.85. Shares closed Monday at $144.88.

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SecureWorks

This smaller cap company had a 2016 IPO and could potentially explode for investors this year. SecureWorks Corp. (NASDAQ: SCWX) is a security services carve-out of Dell, and it offers its global customers security services, outsourcing and consulting. The company is a leader in the $8.7 billion managed security services market, and it also addresses the broader IT security outsourcing and consulting markets.

The company combines its proprietary software platform, the Counter Threat Platform, with its internal security experts to remotely monitor and manage customer-owned security appliances.

The Stifel price objective is $16. The consensus estimate is $12.45, and shares closed Monday at $11.16.

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While the whirlwind around the top cybersecurity stocks has really slowed from the 2013 to 2015 pace, the need is increasing every year sequentially, and the huge Equifax breach makes that even more evident. These top companies offer investors solid ways to play the industry in a multitude of areas.