Massive Yahoo! Data Breech Headlines Seen Positive for Cyber Security Sector - Wells Fargo (CYBR) (FEYE) (PANW) (more...)

While details on Yahoo's (NASDAQ: YHOO) massive e-mail hack are limited, with it being the largest compromise of all time, Wells Fargo analyst Gray Powell views the headlines as a positive for the security software space.

Yahoo has confirmed a data breach involving at least 500 million user accounts. The company believes a ''state sponsored actor'' was behind the breach, which is said to have first occurred in late 2014.

"While the group has regained some lost ground and is now +1% YTD (vs the Nasdaq at +6% YTD), we note that revenue multiples are still compressed relative to historical levels and that free cash flow profiles have substantially improved," Powell said. "Since 2011, the group has traded at an average 6.4x EV/ NTM revenue with a standard deviation of 1.2x. Today, the group trades at just under 5.0x 2017E EV/revs. As such, we see potential for multiples to expand."

The firm continues to rates CyberArk Software (NASDAQ: CYBR), Fortinet (NASDAQ: FTNT), Palo Alto Networks (NYSE: PANW), and Proofpoint (NASDAQ: PFPT) at Outperform, and Check Point Software Technology (NASDAQ: CHKP),
FireEye (NASDAQ: FEYE), and Symantec (NASDAQ: SYMC) at Market Perform.

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