Huge global hack will result in rising profits for these network security stocks: BofA

Huge global hack will result in rising profits for these network security stocks: BofA

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

A major security hack affecting numerous global corporations and important segments of the U.S. government has BofA Securities analyst Tal Liani expecting a surge in security-related software spending,

“Last week, FireEye disclosed it was a victim of a cyber breach that set off a wave of other enterprises and government agencies also discovering compromises … In our view, CyberArk, CrowdStrike, Zscaler, Palo Alto Networks, and FireEye should benefit from responses to the breach. Cyberark is the leader in privileged account management, which should see renewed investment as enterprises look to lock-down administrative accounts and keys. We raise our PO for CyberArk from $120 to $170 … CrowdStrike is the leader in endpoint detection and response capabilities, also offering threat intelligence and forensics collection capabilities. The company should see increased adoption as enterprises look to monitor potentially malicious activity on end user devices. We raise our PO for CrowdStrike from $198 to $245 … Zscaler offers zero-trust application access and micro-segmentation capabilities that could see increased demand as enterprises look to limit east-west mobility of potential intruders. We raise our PO from $185 to $235 … Palo Alto Networks is positioned to benefit through its Cortex platform, offering visibility, prevention, detection, and response capabilities”

“@SBarlow_ROB Major hack will support revenue growth for these network security stocks (BoA):” – (research excerpt) Twitter

***

RB Advisors, founded by former Merrill Lynch chief quantitative strategist Richard Bernstein, is expecting a wholesale change in marker leadership for 2021 (my emphasis),

“Earnings in 2021 will have very easy comparisons to 2020′s pandemic-depressed earnings. One could pooh-pooh easy comparisons, but every cycle begins with easy comparisons… our models that forecast profits cycles have decidedly turned more optimistic… These models focus on the basic building blocks of corporate profits: units, pricing power, and margins, and all three in generalized terms seem likely to improve during 2021 versus 2020 … The biggest story for 2021 might not be “the market,” but rather a significant shift in market leadership and sector, style, and size performance that is currently unimaginable to many investors. Innovation, disruption, intangible assets, and long time-horizon investing could give way to ugly cyclicals, unknown small caps, downtrodden value, real assets, and investors’ demand for immediate strong earnings growth.”

“2021: Embrace the profits cycle” – RB Advisors

***

Scotiabank strategist Hugo Ste-Marie warns clients against holding a lot of government bonds in 2021 (my emphasis),

“From an asset mix perspective, we believe government bonds have the worst outlook and possess the greatest risk of generating negative returns. Despite a broad normalization in macro data since last summer, bond yields have remained well anchored near their lows until recently. If growth is firmer next year, LT [long term] inflation expectations drift higher, and investors demand a higher premium to finance massive fiscal deficits around the world, we believe bond yields could also normalize. Prior to the pandemic, U.S. 10-yr yields were hovering around 1.5% …Our U.S. 10-yr bond yield model is even more aggressive, pegging fair value near 1.8%. Since short-term rates remain anchored by central banks, rising LT yields would imply a steeper curve” … Investors should also start discussing and pricing in less accommodative central banks by the end of 2021 if global growth is firmer and COVID-19 stands in the ear-view mirror. A 2013-style “taper tantrum” is thus an increasing possibility for late 2021 / early 2022. SPY > LQD > TLT “

“@SBarlow_ROB Scotiabank: “government bonds have the worst outlook and possess the greatest risk of generating negative returns” – (research excerpt) Twitter

***

Newsletter: “The hydrogen hype cycle is just beginning” – Globe Investor

“The highest yielding stocks on the TSX, plus risk data” – Inside the Market

Diversion: “The Things We (Actually) Loved Watching in 2020″ – The Ringer

Tweet of the Day:

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Published at Tue, 22 Dec 2020 12:44:37 +0000