A brisk couple of days of analyst chatter on cyber security stocks is slightly taking its toll on the high-flying PureFunds ISE Cyber Security ETF (NYSEArca: HACK).
HACK is lower by 1.8% today after Barclays lowered its rating on FireEye (NasdaqGS: FEYE) to equal weight. Shares of FireEye are off nearly 5%, but the stock is still up 9.1% over the past month. The Californina-based cyber security firm is HACK’s 14th-largest holding at a weight of almost 4%.
The Barclays downgrade of FireEye comes a day after Citigroup and Robert W. Baird downgraded Fortinet (NasdaqGS: FTNT), though Citi did boost its price target on that stock to $44 from $41, according to Barron’s. Fortinet is HACK’s tenth-largest holding at a weight of just over 4%.
It is not all glum news in terms of analyst action on HACK holdings. Barron’s also reported Friday that Barclays initiated coverage of Fortinet with an overweight rating and Check Point (NasdaqGS: CHKP) with an equal weight rating. Barclays has a $50 price target on Fortinet, implying significant upside from the $41.30 area at which the stock currently resides.
Barclays has a $90 price target on Check Point, which is also well above where the stock currently trades. The network security provider, which commands a weight of 3.7% in HACK, trades at $80 as of this writing. [Headlines Help HACK]
Barclays is also enthusiastic on Palo Alto Networks (NasdaqGS: PANW), maintaining an overweight rating on the stock while boosting its price target to $210, implying upside of more than 19% from current levels. HACK also devotes about 4% of its weight to Palo Alto.
So here is the near-term bottom line with HACK, at least in the opinion of this writer. Despite a couple of days of some (not all) tepid analyst commentary, the ETF is still up 21% this year. Exclude a few biotech funds, and HACK is 2015’s top industry ETF.
Just seven trading days ago, HACK joined the $1 billion club and its assets under management total has since swelled to $1.24 billion, meaning AUM growth of 20% in seven trading days. [HACK Hits $1 Billion in Assets]
All of that is a roundabout way of saying it is not reasonable to expect HACK and its holdings to move up in unabated, straight line fashion. This is a growth ETF holding growth stocks. There are going to be some bumps in the road. Then again, HACK is just one cyber security imbroglio away from its next move higher and those headlines seem to pop up every week.
PureFunds ISE Cyber Security ETF
