Cybersecurity is going to be even bigger business in the future after the furore surrounding the TalkTalk hack recently.
That’s the view of broker Peel Hunt, which has put forward its view on how investors should best play the trend.
The broker sees budgets increasing; a move towards detection and response; more intelligent integrated solutions and for businesses to increase outsourcing of cybersecurity to specialists and managed service providers.
It provides an opportunity for six companies, suggest the broker.
Unsurprisingly four are client stocks: NCC (LON:NCC); GB Group (LON:GBG); Iomart (LON:IOM) and Regenersis (LON:RGS).
Its favourite is Sophos (LON:SOPH), the only cybersecurity company focused on the mid-network and endpoint security, which Peel Hunt says is a market worth US$11bn.
It is growing at 14% per year, (twice the rate of the market) through differentiated products, such as its cloud-based partner platform and its advanced threat management tool, Galileo. Buy with target price of 330p.
Market veteran Microfocus (LON:MCRO) is its other recommendation. Some 17% of pro forma revenues are from its Identity Access Management & Security business.
Its product sets are focused on detection but also digital business enablement and are in an emerging sweet spot of the market. Buy with a 1,450p target.