2014 is expected to be an eventful year for Cybersecurity
software providers as enterprises aim to tighten their security
loopholes amid growing cyber attacks. According to
) McAfee lab cyber attacks will accelerate much faster in 2014 as
compared to 2013 and 2012.
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The data breach at Target that affected 110 million people during
the holiday season of 2013 reflects this alarming trend.
) RSA division, besides Target and Neiman Marcus Group Ltd, data
of at least 41 retail companies were hacked and debit &
credit-card data of approximately 50K customers were stolen
during the same period.
We believe that growing cyber attacks will boost demand for new
products from enterprises, which will drive enterprise spending.
Per a joint report from IDC and the National University of
Singapore (NUS) globally enterprises are expected to spend
approximately $500.0 billion to fight malware and data breaches
The mainstream adoption of cloud computing, Internet of things
and Bring Your Own Device (BYOD) is expected to aggravate
vulnerability of IT systems. According to McAfee cyber-criminals
will increasingly target
) Android based mobile devices through malware.
McAfee noted that hackers will be aiming to take advantage of
security loopholes in mobile browsers and mobile devices using
near-field communication (NFC) technology. They will also target
HTML-5 based applications on personal computers and mobile
devices. Social networks such as
, Twitter, LinkedIn, Instagram are also expected to face
increasing cyber attacks by the end of 2014.
Despite being blamed for its sluggish actions, the U.S. federal
government's Cybersecurity funding is one of the largest in the
world. In the 2014 federal budget, the U.S. Cyber Command
received $447.0 million, more than double its 2013 funding of
Per IDC Retail Insights, spending on e-security in the U.S. will
increase 5.7% year over year to $720.3 million in 2014. Retailers
are expected to spend on new cybersecurity measures to tighten
loopholes in their system, to regain customer confidence in 2014.
This includes adoption of chip-based credit cards (Target to
spend $100.0 million) as well as advanced cyber attack detection
systems that use Big Data analytics.
According to Gartner, Big Data analytics is expected to play a
significant role in preventing cyber attacks as it traces data
breaches at a much faster pace than traditional security
software. Gartner expects 25.0% of enterprises to adopt Big Data
analytics for this purpose by 2016.
2 Stocks to Pick
Here are 2 stocks, which we expect to benefit most from
increasing enterprise spending on Cybersecurity:
Akamai Technologies Inc
) - The increasing adoption of cloud and mobile computing are
expected to drive demand for Akamai's performance & security
solutions (44.0% of 2013 revenues) going forward. The acquisition
of Prolexic (develops software that prevents DDoS attacks)
expands its product offerings for non-web applications as well as
enterprise data centers.
Over the last 12 months, the shares of this Zacks Rank #2 (Buy)
stock has increased 71.7%. Akamai's earnings per share are
expected to increase 14.5% over the next five years.
) - FireEye's strong product portfolio that caters to threat
prevention, central management and forensic analysis is a
significant growth driver. The company acquired Mandiant, which
strengthened its position as an end-to-end security software
provider. FireEye's revenues jumped 94.0% in 2013.
Over the last 12 months, the shares of this Zacks Rank #3 (Hold)
stock has increased 98.6%. FireEye's earnings per share are
expected to increase 18.3% over the next five years.
Advanced security solutions are not the only answer to the
Cybersecurity problem. Vigilance and awareness are equally
important. We believe that solutions that can tackle security
issues on a real time basis will lead the market over the long