Pain Ahead For Cyber Security ETFs As Q3 Unfolds?

Cyber security stocks have been on a torrid run with most of them hitting new highs lately thanks to the volley of cyberattacks and increased speculation of M&A activity. Additionally, an earnings beat by Proofpoint (PFPT – Free Report) last week swept away the negative sentiments in the industry built in by Fortinet’s (FTNT – Free Report) profit warning and made investors confident about earnings results of other players.

As a result, two cyber ETFs –PureFunds ISE Cyber Security ETF (HACK – Free Report) and First Trust NASDAQ CEA Cybersecurity ETF (CIBR – Free Report) – will be on investors’ radar for the coming weeks as Q3 unfolds. Among some top players, Juniper Networks (JNPR – Free Report) is slated to release its earnings result on October 25 after the opening bell while Check Point Software Technologies (CHKP – Free Report) will post its results on October 31 before the opening bell. CyberArk Software (CYBR- Free Report) , FireEye (FEYE – Free Report) , Imperva (IMPV – Free Report) and Symantec (SYMC – Free Report) will release their quarterly reports on November 3. All these six stocks account for nearly 25% of HACK and 20% of CIBR.

Given this, it is prudent to look at our Zacks model to find out any hidden gems that would fuel the performance of the industry and ETFs in the weeks ahead:

Inside Our Prediction

Juniper Networks has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%, which makes surprise prediction difficult. The stock saw a negative earnings estimate revision of five cents over the past 90 days for the yet-to-be-reported quarter. However, it delivered positive earnings surprises in three of the last four quarters, with an average beat of 2.34%. The stock has a VGM Style Score of B.

Check Point has a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%, which makes surprise prediction difficult. Though Check Point delivered positive earnings surprises in the last four quarters, with an average beat of 4.22%, the stock saw negative revision of four cents over the past 90 days for the yet-to-be-reported quarter. The stock has a VGM Style Score of D.

CyberArk has a Zacks Rank #3 and an Earnings ESP of 0.00%. However, the earnings surprise track over the past four quarters is good, with an average beat of 68.21%. The stock also witnessed a positive earnings estimate revision of three cents over the past 90 days for the yet-to-be-reported quarter. The stock has a VGM Style Score of C.

FireEye also has a Zacks Rank #3 and an Earnings ESP of 0.00%. It saw negative earnings estimate revision of a couple of cents over the past three months for the to-be-reported quarter but delivered positive earnings surprises in the last four quarters, with an average beat of 10.12%. The stock has a VGM Style Score of C.

Imperva has a Zacks Rank #3 and an Earnings ESP of +20.64%, indicating a reasonable chance of beating estimates this quarter. While the company delivered earnings surprises in two of the past four quarters with an average beat of 23.26%, its earnings estimate for the yet-to-be-reported quarter moved down by 18 cents over the past three months. The stock has a VGM Style Score of C.

Symantec has a Zacks Rank #2 and an Earnings ESP of 0.00%. Like many of its peers, it also saw its earnings estimates moving down by 7 cents for the yet-to-be-reported quarter. However, the earnings surprise history is good, with average beat of 6.07% for the past four quarters. The stock has a horrible VGM Style Score of F.