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Cyber security stocks rise after global ransomware attack

Posted On: May. 15, 2017 8:34 AM CST

 

(Reuters) - A global ransomware attack disrupting factories, hospitals, shops and schools spurred investors on Monday to buy up stocks expected to benefit from a pick-up in cybersecurity spending by firms and government agencies.

The cyber attack began spreading across the globe on Friday and by Monday had locked up computers in more than 150 countries, with experts warning of an even wider impact as more employees logged on and checked e-mails.

European Union police agency Europol said on Monday the attack had hit 200,000 machines.

“These attacks help focus the minds of chief technology officers across corporations to make sure security protocols are up to date, and you often see bookings growth at cybersecurity companies as a result,” said Neil Campling, head of technology research at Northern Trust.

In London, shares in cloud network security firm Sophos jumped more than 7% to a record high and security firm NCC Group rose 2.9%.

Mr. Campling said Sophos was particularly likely to benefit as its customer base was dominated by small and medium-sized companies, whose IT systems were often less well protected than larger firms and hence more likely to fall victim to ransomware attacks.

U.S.-listed shares in cybersecurity firms Fireeye rose 4.8% in pre-market, and peers Symantec, Palo Alto Networks and Cyberark Software Ltd were all up 3%.

Companies’ spending on cybersecurity protection is set to increase 10% in Britain and Europe by 2020, according to Brian Lord, a managing director of cyber and technology at cybersecurity firm PGI, as outdated IT systems get a refresh.

“In many companies there’s been an increase in investment in IT but not in the security that sits around it, so this investment is likely to play a bit of catch-up,” said Mr. Lord, who spent 21 years at UK government intelligence service GCHQ.

The risks of security breaches, particularly when they result in the leak of sensitive customer data, has had a direct impact on share prices as investor confidence is shaken.

“Reducing the cost of security breaches by only 10% can save global enterprises $17 billion annually,” Morgan Stanley said in a report published on Monday.

The U.S. broker upgraded its rating on networking equipment giant Cisco to “overweight.” Cisco shares were up about 2% in pre-market trade.

With few pure play, publicly-traded software and network security companies in Europe, a London-listed cybersecurity exchange-traded fund whose holdings include Cisco and Fireeye, was in demand, up 1.8% by midday.

In Helsinki, Finnish digital security firm F-Secure jumped as much as 5.1% to a 16-year high.