String of Earnings Beat Pushes Cybersecurity ETFs Higher

Cyber security stocks gained immense traction in recent months due to lockdowns, which have raised the need for cyber security due to increased usage of Internet. Additionally, most of the cybersecurity firms came up with stronger-than-expected earnings, outpacing the Zacks Consensus Estimate for both earnings and revenues (read: Cyber Security ETFs to Thrive in the Virus-Hit Economy).

Let’s check out the first-quarter results of some of the cyber security firms that have the largest allocation to the ETFs in this niche area of the technology sector:

Cybersecurity Earnings in Focus

Fortinet FTNT posted earnings per share of 60 cents, easily topping the Zacks Consensus Estimate by 20% and improving significantly from the year-ago quarter’s 46 cents. Revenues rose 22% year over year to $577 million and were above the consensus mark of $557 million.  The company projects revenues in the range of $590-$605 million and earnings per share of 64-66 cents for the second quarter.

Akamai Technologies AKAM topped earnings per share and revenue estimates by 4.4% and 2.2%, respectively. The bottom line increased 9% from the year-ago quarter while revenues improved 8%. For the second quarter of 2020, the company expects revenue in the range of $752-$778 million and earnings per share in the range of $1.18-$1.24 (see: all the Technology ETFs here).

Proofpoint PFPT outpaced the Zacks Consensus Estimate by 40.74% for earnings and 1.27% for revenues. Earnings per share declined 5% from the year-ago quarter while revenues jumped 23%. For the second quarter, the company expects revenues in the range of $251-$255 million and earnings per share of 38-41 cents. For the full year, Proofpoint lowered the revenue guidance to $1.005-$1.030 billion from the previous projection of $1.060-$1.067 billion and earnings per share to $1.41-$1.46 from $1.42-$1.48.

Check Point Software Technologies CHKP posted earnings per share of $1.42, outpacing the Zacks Consensus Estimate by 2.9% and revenues of $486 million also came above the consensus mark of $481 million. On a year-over-year basis, earnings grew 7% while revenues were up 3%. The company dis not offer any guidance due to COVID-19 pandemic.

CyberArk Software CYBR outpaced the Zacks Consensus Estimate by 35.1% for earnings. Revenues came in line with estimates. Earnings per share were lower than the year-ago figure of 56 cents while revenues grew 11%. The company expects earnings per share of 17-35 cents and revenues of $95-$105 million for the second quarter (read: Tech Sector Outperforming This Year: Best ETFs, Stocks).

ETFs in Focus

Given the string of earnings beat and coronavirus-led demand, ETFMG Prime Cyber Security ETF HACK and First Trust NASDAQ CEA Cybersecurity ETF CIBR have gained 9.4% and 5.2%, respectively, in a month. Below we have highlighted them in detail:

HACK in Focus

The fund provides global exposure to the cybersecurity industry comprising companies that offer hardware, software, consulting and services to defend against cybercrime. It tracks the Prime Cyber Defense Index, holding 55 securities in its basket. It is well spread out across components with the in-focus five firms accounting for around 3% share each. From an industrial look, systems software accounts for 57.3% of the portfolio while communication equipment and IT consulting round off the next two. The fund has amassed $1.3 billion in AUM and charges 60 bps in fees per year. Volume is solid as it exchanges nearly 241,000 shares in hand per day.

CIBR in Focus

This ETF has accumulated nearly $1.6 billion in its asset base and charges 60 bps in annual fees. It trades in moderate average daily volume of around 390,000 shares. The fund follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. In total, the product holds 44 stocks in its basket with the in-focus firms accounting for around 3% share each (read: Cisco's Robust Q3 Results Put These ETFs in Focus).

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Check Point Software Technologies Ltd. (CHKP) : Free Stock Analysis Report
 
Akamai Technologies, Inc. (AKAM) : Free Stock Analysis Report
 
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report
 
ETFMG Prime Cyber Security ETF (HACK): ETF Research Reports
 
Proofpoint, Inc. (PFPT) : Free Stock Analysis Report
 
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
 
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