Top Merrill Lynch US Cybersecurity Stock Picks for Secular Thematic Gains
While much of the report is dedicated to larger macro themes and portfolio allocations, Merrill Lynch usually has a sector feature or two worth review. This particular review is how cybersecurity is now a top global risk today. The firm also has several cybersecurity stocks it likes, and 24/7 Wall St. has focused on the U.S. aspects of the report.
Merrill Lynch’s report further showed that there have been 80 million to 90 million cybersecurity events per year, and 70% or so go undetected. The firm shows how cyberattacks are now the primary source of economic attacks against governments and of intellectual property theft, with the average cost of cybercrimes for U.S. companies reaching a record $12.7 million in 2014 and with a total cost to the global economy being up to $575 billion annually.
Merrill Lynch’s thematic strategist is Sarbjit Nahal, and he has created a list of so-called Primer Picks in cybersecurity. These are also covered by Merrill Lynch’s global research fundamental analysts, and they were rated as Buy at the time the review began in September.
24/7 Wall St. has pulled out the featured names, and we have included the more updated price target from the analysts if they have changed. Again, these are just the U.S.-based companies listed in the October RIC report that are set to benefit from cybersecurity themes.
Barracuda Networks Inc. (NYSE: CUDA) was updated in coverage back on September 30 after the company’s shares were batted on guidance. Merrill Lynch called it “bruised, but not broken” after the billings outlook was light. Their take on Barracuda is that execution issues in EMEA/APJ regions drove the majority of weakness. The firm maintained its Buy rating, but lowered its price objective to $30.00 from $42.00 in the call.
Barracuda shares were last seen trading at $19.17, with a consensus analyst price target of $28.20 and a 52-week trading range of $14.77 to $46.78.