Listed cybersecurity stocks could spark investor interest as two tech giants may be on the lookout for acquisitions in the sector.
Computer security – widely marketed as cybersecurity – has drawn attention following major security breaches in recent years, including a US oil infrastructure company, Colonial Pipeline, which was ransomed by hackers l ‘last year.
Late Friday The Wall Street Journal reported that networking equipment maker Cisco Systems (CSCO) had made a $20 billion (£14.8 billion, €17.7 billion) takeover bid for Splunk (SPLK) .
Splunk was up 14% after hours trading on Friday. On Monday, the stock opened 5% higher at $120.78 per share and was up nearly 9% in morning trading.
San Francisco-based Splunk makes security information and event management (SIEM) software that provides real-time analysis of security alerts generated by applications and hardware on an organization’s IT network.
The company’s software can even be configured to display on large-screen televisions so that the work of an IT security team can be seen in real time.
Last November, Splunk CEO Doug Merritt stepped down after leading the company for six years, with Graham Smith taking over as interim director.
Third quarter results
In December, Splunk announced that its third-quarter non-GAAP tax loss widened to 37 cents per share, from 7 cents a year earlier, on revenue that rose 19% year-on-year to 664. .8 million.
Total annual recurring revenue (ARR) — a key metric used by subscription businesses — rose 37% to $2.83 billion for the three months ended Oct. 31.
“The third quarter marked a significant milestone for Splunk, as it was our first billion-dollar cloud ARR quarter, with cloud accounting for a record 68% of our software bookings,” said Graham Smith, Interim CEO and President of Splunk, in a statement.
wait and watch
An analyst warned Splunk shareholders following the report.
“While the companies are not yet in active discussions, we urge Splunk shareholders to remain cautious about the valuation of Splunk included in Cisco’s offer. Although the specific amount was not disclosed in the news report , we suspect Cisco’s offer of ‘over $20 billion’ would not adequately compensate Splunk shareholders,” Morningstar analyst Malik Ahmed Khan wrote in a note.
“Based on our calculations, we would advise against Splunk shareholders accepting a deal below approximately $28 billion…As a result, we believe Splunk shareholders should wait for a better offer from Cisco or a other interested party,” the Morningstar analyst said. wrote.
Splunk is expected to report fourth quarter results on March 2.
Last week, Bloomberg News reported that Microsoft (MSFT) is considering making an offer for Mandiant (MNDT).
In early Monday morning trading, Mandiant was up 23% at $18.63.
The company changed its name to Mandiant after selling its FireEye products business for $1.2 billion to Symphony Technology Group in June 2021, while retaining Mandiant, the cybersecurity and incident response products company acquired in 2014.
Last week, Mandiant posted a fourth-quarter loss per share that narrowed by a penny to 10 cents on revenue that rose 21% to $133 million.
“We reached an important milestone in the fourth quarter, divesting the FireEye Products business and positioning Mandiant to accelerate growth and expand our leadership position in expertise and intelligence,” said Mandiant CEO, Kevin Mandia, in a press release.
“We are uniquely positioned to fill a huge market need and can focus our full attention on helping organizations close their cybersecurity gaps.”
Investors looking to get into the cybersecurity sector could turn to exchange-traded funds (ETFs). Rather than investing in the shares of an individual company that are likely to decline in value, an ETF spreads risk by aggregating the shares of multiple companies into an exchange-traded product that typically has lower fees than mutual funds. traditional investments.
Among the many cybersecurity-focused ETFs available to investors are: