The Buzz

All markets and investing news all the time

Hack attacks = big $ for cybersecurity IPO

September 25, 2014: 1:38 PM ET

High-profile cyberattacks against prominent retailers and banks may be helping newly public CyberArk. Shares have doubled.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

The Nasdaq was in blood red mode Thursday. But the big drop in tech stocks didn't hurt the performance of a red hot IPO.

No, I'm not talking about Alibaba (BABA). A company called CyberArk Software (CYBR) went public Wednesday. Shares surged nearly 90%. And they rose nearly 10% on Thursday.

So why is this stock being spared from the brutal momentum sell-off? One word: Hacking.

CyberArk develops software designed to protect companies from malicious attacks by cybercriminals, so-called "hacktivists" and even government-sponsored groups engaging in industrial espionage.

Target (TGT). JPMorgan Chase (JPM). Home Depot (HD). All of them have been in the headlines due to security breaches. So it's no wonder that a company like CyberArk would be in demand.

Related: Why Home Depot is not the next Target

The company's main product helps companies keep "privileged accounts" -- think of things such as log-in info for a big company's IT managers and passwords to social media accounts -- safe. And this looks like a very lucrative business.

Sales rose 30% in 2012 and another 40% last year. And revenue through the first six months of 2014 is up 33% from the same period in 2013.

CyberArk has also been profitable the past few years. It did lose money in the first half of 2014 -- but that was solely due to expenses tied to revaluing warrants ahead of the IPO.

Another plus for the company? It's already a worldwide player in the cybersecurity market. Nearly half of the company's sales come from outside the U.S. (CyberArk is based in Israel and has its U.S. headquarters in Newton, Mass.)

Related: How safe are you? Read CNNMoney's cybersecurity Flipboard

But investors need to be careful before they decide to board the CyberArk. Shares trade at more than 130 times last year's earnings. That's extremely expensive.

The company also faces competition from both pure-play cybersecurity firms such as Palo Alto Networks (PANW) and FireEye (FEYE) as well as subsidiaries of tech giants IBM (IBM), Oracle (ORCL) and Hewlett-Packard (HPQ).

Shares of the smaller pure-play cybersecurity stocks have been ridiculously volatile this year. They got a pop recently after Jennifer Lawrence and several other celebrities had their nude photos published online following a hack of their iCloud accounts.

But investors have to do their homework with these companies. Not all of them are going to thrive. Just look at how poorly FireEye's stock has done this year. Palo Alto, on the other hand, has been a Wall Street darling.

So will CyberArk turn out to be more like Palo Alto than FireEye? That's hard to say just yet.

The only thing that's clear is that CyberArk seems to have replaced Alibaba as Wall Street's favorite IPO flavor of the month.

Reader Comment of the Week! Not a good week for Apple (AAPL).

The jury's still out on whether BendGate is a real problem or not. But the company's iOS 8.0.1 update was a disaster. I thought the company was discontinuing the iPod Classic? Maybe Apple needs to give away some free music again. Oh wait. That was a PR nightmare too.

One follower said he was in the uncomfortable position of downloading iOS 8.0.1 right around the time Apple 'fessed up and pulled it. His concern about what might happen next (as well as a follow-up tweet about the Beastie Boys) win him this week's Reader Comment honors.

Ha! Hope the update went well. Go Giants, by the way.

And my advice to all of you new iPhone 6 and 6 Plus owners regarding that whole unintentional curve issue? Take the device out of your back pocket if you plan to Shake Your Rump!

  • Lowe's struggles against Home Depot

    As the housing market heats up, so is competition among home improvement retailers.

    A day after Home Depot (HD) delivered earnings and revenue that were much better than forecasts and raised its guidance, Lowe's (LOW) reported a weaker-than-expected quarterly profit for the first-quarter on declining sales.

    Lowe's CEO Robert Niblock blamed "cooler than normal temperatures and greater precipitation" for the soft sales figures. In contrast, Home Depot CEO Frank Blake said his company continued to MORE

    - May 22, 2013 1:14 PM ET
  • The market doesn't lie: Housing recovery is real

    The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

    If the housing market is really on the mend, that is undeniably a good sign for the broader economy and the stock market.

    Guess what? It's increasingly looking like the housing rebound is, to pull a MORE

    - May 21, 2013 1:06 PM ET
  • Home Depot cashes in on housing recovery

    Home Depot's stock rallied Tuesday, after the home improvement retailer reported strong results, boosted its dividend and announced plans to buy back shares.

    Shares of Home Depot (HD) gained 5.6% in afternoon trading.

    The nation's leading do-it-yourself home improvement retailer said sales rose 14% in the fourth quarter to $18.2 billion. That helped Home Depot report net earnings of $1 billion, or 68 cents per share, for the quarter.

    On top of that, MORE

    - Feb 26, 2013 2:25 PM ET
  • Lowe's earnings, stock keep improving

    Lowe's (LOW) impressed investors with third quarter results Monday that showed the home improvement retailer is following its own slogan to "never stop improving."

    Third quarter profits jumped 76% from a year ago. Investors, in turn, pushed the stock up nearly 7% Monday. That had some traders on StockTwits excited.

    elliottrexler: $LOW. Is an increase in same store sales oversees an indication of what's to come? #Lowes Beats estimates

    Still it's unclear MORE

    - Nov 19, 2012 12:35 PM ET
  • It could be a red hot holiday season for retail

    Ahead of Black Friday and the holiday shopping season, some retailers are looking rosy.

    Michael Kors (KORS), Dicks Sporting Goods (DKS), TJ Maxx (TJX), Saks (SKS) all reported their latest quarterly results Tuesday. Shares of each moved higher. Home Depot (HD), which isn't as much of a Black Friday beneficiary, also posted strong results and cited the ongoing housing recovery. Shares of Home Depot and Dicks Sporting Goods each jumped MORE

    - Nov 13, 2012 2:25 PM ET
  • Let's sell something together? Lowe's dips on earnings

    Is the housing market really recovering? If you look at the latest results from Lowe's (LOW), you'd be tempted to answer no. But Lowe's top rival, Home Depot (HD) reported a pretty strong quarter and issued good guidance last week. Shares of Lowe's fell more than 4% in early trading Monday.

    It seems that housing is slowly but surely rebounding. The problem with Lowe's seems to be that Home Depot is MORE

    - Aug 20, 2012 10:11 AM ET
  • Paul Ryan owns today's top Dow and S&P 500 stocks

    The Paul Ryan stock portfolio continues to shine. Two stocks that the Republican vice presidential candidate owns - Home Depot (HD) and Estee Lauder (EL) -- spiked Tuesday after both companies reported better-than-expected quarterly results.

    As of mid-morning Home Depot was up 3%, making it the best performer in the Dow. And Estee Lauder's shares shot nearly 8% higher, making them the top gainer in the S&P 500.

    Ryan seems to have MORE

    - Aug 14, 2012 10:37 AM ET
Fear & Greed
Sponsored by
Stupid Stock Move of the Day
#StupidStock Move of the Day! Yes, Urban Outfitters may be finally turnings things around. But $URBN up 17%? Seems a bit excessive, no?
Powered by VIP.