The tech-heavy Nasdaq Composite is off 4.6% in the past three months while the broader technology ETF
XLK
has lost 1.3% and
ETFMG Prime Cyber Security ETFMG Prime Cyber Security Fund
HACK
has retreated 0.7%. While rising rates have dealt a blow to the tech ETFs this year, we expect the pain over the space to lessen in 2023 as the Fed is likely to slow the rate hike pace.
Among the many corners in the tech space, we expect one area – cybersecurity – to emerge winner in the group. The latest earnings picture gives the cues.
Earnings in Detail
Earnings reports from
CrowdStrike
CRWD
and
SentinelOne
S
pleasantly surprised Wall Street lately. CrowdStrike Holdings reported third-quarter fiscal 2023 non-GAAP earnings of 40 cents per share, beating the Zacks Consensus Estimate of 32 cents. CrowdStrike’s fiscal third-quarter revenues of $580.9 million surged 53% year over year and surpassed the consensus mark of $574.7 million.
SentinelOne came out with a quarterly loss of $0.16 per share versus the Zacks Consensus Estimate of a loss of $0.22. The company posted revenues of $115.32 million for the quarter ended October 2022, surpassing the Zacks Consensus Estimate by 3.93%. Both companies that are targeted at offering protection to many devices attached to corporate networks, raised their guidance too.
Okta Inc.
OKTA
reported breakeven earnings in third-quarter fiscal 2023, beating the Zacks Consensus Estimate by 100%. Total revenues increased 37.2% year over year to $481 million and surpassed the consensus mark by 3.76%.
Splunk Inc.
SPLK
reported solid third-quarter fiscal 2023 results (ended Oct 31, 2022), beating both the bottom-line and top-line estimates driven by healthy demand trends. Non-GAAP income in the reported quarter was 83 cents per share, which beat the Zacks Consensus Estimate by 60 cents. Total revenues in third-quarter fiscal 2023 improved to $929.8 million, beating the consensus estimate of $846 million.
In mid-November,
Palo Alto Networks
PANW
reported non-GAAP earnings of 83 cents per share, beating the Zacks Consensus Estimate of 68 cents. Palo Alto’s fiscal first-quarter revenues of $1.56 billion surpassed the Zacks Consensus Estimate of $1.55 billion. PANW is up 19.5% past month.
In mid-November,
Cisco Systems
CSCO
reported first-quarter fiscal 2023 non-GAAP earnings of 86 cents per share, which beat the Zacks Consensus Estimate by 2.38%. Revenues increased 5.7% year over year to $13.63 billion and beat the consensus mark by 2.32%.
Across the security landscape, vendors are busy providing tools to big companies concerned about susceptibilities that have arisen due to the remote work and hybrid concept and an increase in cyber-attacks due to Russia-Ukraine war,
per CNBC
.
Against this backdrop, below we highlight a few cybersecurity ETFs that should be tracked for gains in the coming days.
ETFs in Focus
ETFMG Prime Cyber Security ETFMG Prime Cyber Security Fund
HACK
– Up 7.3% Past Month
WisdomTree Cybersecurity Fund
WCBR
– Up 7.1% Past Month
First Trust NASDAQ Cybersecurity ETF
CIBR
– Up 6.7% Past Month
iShares Cybersecurity & Tech ETF
IHAK
– Up 5.5% Past Month
Global X Cybersecurity ETF
BUG
– Up 5.4% Past Month
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