NET Stock: Should You Buy Cloudflare for Rising Cybersecurity Threats?
Cloudy (NYSE:REPORT) was hero stock during the pandemic, and growing cybersecurity threats from Russia and North Korea may repeat themselves this year. Cloudflare’s services were in high demand during the pandemic. After all, making content load faster and protecting websites from hackers was a booming business. In response, NET stock soared to a nearly 1100% gain between November 2019 and November 2021. Then a long slide began, which lasted until January. NET stock has been up and down in recent weeks, but remains down 6% so far in 2022.
There are two ways to look at Cloudflare. One is promising, the other even more so.
As a content delivery network (CDN), Cloudflare’s mission is to provide the fastest possible access to websites and web services. Naturally, this activity has accelerated during the pandemic, but it is going nowhere as the pandemic winds down.
But what I want to talk about today is cybersecurity. This is another big part of Cloudflare’s business. It includes secure access for remote/hybrid workers and website attack protection. And all signs point to this company experiencing tremendous growth.
Internet security was a big deal thanks to the pandemic
The demand for cybersecurity services has increased due to the pandemic on multiple fronts. This request has seen the value of NET shares soar.
Companies and organizations that have been forced to close their offices and send employees to work remotely have had to lock down this access. Securing a PC in a building is hard enough. Securing access for an employee – most likely using a personal device – used to work with critical data from a home internet connection is a whole different animal.
Cloudflare offers a wide range of services, including Zero Trust Network Access and Zero Trust Web Browsing. These measures help protect companies from threats via remote access for their employees.
The company also offers security services that protect websites against cyber threats such as Distributed Denial of Service (DDoS) attacks. These attacks can bring websites and web services to a complete halt. With consumers and customers relying on online shopping during the pandemic, this protection has become even more important.
Rogue states will push cybersecurity needs to new levels
Projections already showed that the global cybersecurity industry was on a strong growth trajectory. According to a Fortune Business Insights report, it was worth $139.77 billion in 2021. This is expected to reach $376.22 billion by 2029, growing at a compound annual growth rate (CAGR) of 13.4%.
However, the situation quickly changed in the first months of 2022. Cybersecurity is becoming an even bigger threat than expected. Two countries notorious for promoting cyberattacks are stepping up their efforts. There are growing fears that Russia is trying to launch large-scale cyber attacks against Western countries in retaliation for sanctions against invading Ukraine.
Additionally, North Korea has stepped up its hacking efforts, bringing in some badly needed money. Just a few days ago, the country was discovered to be behind attacks on computers running the Chrome operating system using malware hosted on hacked websites. Among the targets were those in the media, cryptocurrency, IT specialists and financial services.
Hacking efforts by Russia and North Korea have real potential to drive cybersecurity spending higher than originally forecast. It would be a win for a company like Cloudflare and it would be reflected in the NET share price.
Conclusion on NET stock
Cloudflare shares have seen a pullback since their peak last November. Despite a recent rally, they are still down 6% in 2022.
The slowdown in Cloudflare’s growth rate was to be expected given the waning influence of the pandemic. Despite this, the company still performed well in 2021, when Cloudflare reported its fourth quarter results in February, revenue was up 54% year over year. Full-year revenue grew 52% for 2021, the company’s fifth consecutive year of growth of 50% or more. The results narrowly exceeded Wall Street expectations. The company also announced additional security offerings, including new Zero Trust features.
Looking at what investment analysts see happening with NET stocks, the 18 analysts tracked by CNN Business have NET rated as a narrow consensus “buy”. Their 12-month median price target of $147 offers a 25% upside. Plug the numbers in portfolio binder and you will find that NET gets a “B” rating.
Cloudflare is not entirely risk-free On the one hand, the company’s decision to stay in Russia could lead to the loss of customers. However, with NET shares currently priced 44% below their all-time high close of $217.25 on November 18, 2021 and the cybersecurity sector set to get hotter than ever thanks to Russia and North Korea, Cloudflare is a pretty safe choice for long-term growth. .
As of the date of publication, Louis Navellier had a long position in NET. Louis Navellier has held (neither directly nor indirectly) any other position in the securities mentioned in this article. The InvestorPlace research staff member primarily responsible for this article has not held (directly or indirectly) any position in the securities mentioned in this article.