Why WannaCry Ransomware Attack Triggered A Rally In Sophos Group PLC (SOPH) Shares

Not a nightmare for Sophos Group PLC (LON:SOPH)

Organisations and governments across the world woke up to a real world nightmare situation this Monday, wondering whether they were somehow affected by the ‘WannaCry’ ransomware attack, which has so far claimed nearly 200k victims in nearly 150 countries, as reported by Reuters, over the past weekend. But the same can’t be said for Abingdon-headquartered cybersecurity firm Sophos Group PLC (LON:SOPH), which offers cloud-enabled end user and network security solutions — shares of the company jumped almost 8% in early-trading on Monday. Sophos provides a full range of security solutions, encompassing “endpoint, encryption, email, web, mobile, network security and Unified Threat Management products”.

Why Sophos stands to gain big

Sophos has a market capitalisation of more than £1.6 billion, over 60% bigger than its £1 billion valuation at the time of IPO-launch in mid-2015, when the company, largely owned by PE firms and institutional investors, raised nearly £80 million to reduce debt on its balance sheet and fund its global expansion. What has brought Sophos today in the thick of things is its focus on small- and mid-sized enterprises with 100–5,000 employees — potentially the biggest demand driver, due to lack of a dedicated cybersecurity cell, for IT-security products in the wake of expanding reach and frequency of cyber attacks.

And financially

LSE:SOPH Sophos Group Future Revenue and Net Income by Simply Wall St
LSE:SOPH Sophos Group Future Revenue and Net Income by Simply Wall St
Expected to turn profitable in the fiscal year to Mar’17, Sophos sports an analysts’ consensus projecting revenue to almost double by 2021, which may now occur well before that due to the fast changing cybersecurity landscape with several multinational corporations and government agencies being compromised over the past year. Set to report full-year results this Wednesday, the company is expected to deliver FY’17 revenue of £417 million, a nearly 12% jump from the last fiscal, and a net income of £22 million, its first annual profit since 2013, as per the available data. The double-digit revenue growth this fiscal compared to last year’s 7.5% is underpinned by an 18% jump in reported billings during the fiscal fourth quarter to US$630 million, ahead of analysts’ expectations between US$610 million and US$617 million. These estimates exclude the recently announced nearly US$120 million acquisition of Invincea, which will augment the company’s endpoint security solutions through its machine learning algorithms, which currently power a next-generation antivrus solution that detects and stops “malware without relying on signatures”.