Cybersecurity Names Surge Following 'Wannacry' Ransomware Attack

Shares of cybersecurity solutions providers are soaring Monday after a cyberattack involving a ransomware called "WannaCry" hit businesses, hospitals and government agencies in at least 150 countries over the weekend. 

WHAT'S NEW: The attack, the highest-profile computer-worm outbreak in nearly a decade, is likely to keep spreading, reports say. The ransomware, which took advantage of security vulnerabilities in Microsoft (MSFT) software, affected companies including Renault (RNSDF), FedEx (FDX) and Hitachi (HTHIY).

INCREASED SPENDING ON DEFENSES SEEN: Evercore analyst Ken Talanian said the attack serves as a reminder that ransomware campaigns will remain a threat enabled by the darkweb, anonymous connectivity, and anonymous cryptocurrency. Talanian added the continued threat will drive investment opportunities in cybersecurity solutions providers including Fortinet (FTNT), Check Point (CHKP), Symantec (SYMC) and Proofpoint (PFPT). Oppenheimer analyst Shaul Eyal agreed the attack could lead organizations to "fear-driven product procurement" to boost cybersecurity defenses, saying Check Point, Cyber Ark (CYBR), FireEye (FEYE), Fortinet, Imperva (IMPV), Mimecast (MIME), Palo Alto Networks (PANW), Splunk (SPLK), Symantec, and Verint (VRNT) stand to benefit.

HARDWARE IMPACT: In an analyst action that did not cite this particular attack, but discussed the broader theme of IT security, Morgan Stanley analyst James Faucette upgraded Cisco (CSCO) to Overweight from Equal-weight and raised his price target to $39 from $32. Citing a "paradigm shift to security-defined networks," which the analyst expects to become the primary driver of network spending, Faucette said he continues to see evidence that security sales are beginning to pull through network equipment upgrades, which he thinks will improve replacement cycle metrics. Separately, Longbow Research analyst Joe Wittine reiterated Buy stances on Seagate (STX) and Western Digital (WDC), arguing that the attack could "drive incremental corporate PC replacement during 2Q and 2H."

PRICE ACTION: Fortinet, Check Point and Symantec rose 3.5%, 2.2% and 3.9%, respectively in morning trading. Proofpoint and FireEye each increased about 9%, while Mimecast, Palo Alto Networks and Splunk gained from 2% to nearly 8%. Meanwhile Cisco rose 2.5% to $34.28 in morning trading