Does Facebook (FB) Seek Cybersecurity Acquisition? Top Analyst Weighs in on the Stock
If a burglar entered your home through the front door, would you change your lock? Seems like a logical yes. Facebook (FB) is interviewing locksmiths as the company aims to regain security to its enormous social media network. It’s no surprise the company would see a cybersecurity team as an investment after 30 million Facebook users were impacted by a security breach. Facebook is amid the perfect cyber storm and might be shooting off its flare gun. The Information, a digital media company, says an acquisition is likely to happen before the end of the year.
Oppenheimer’s top analyst Shaul Eyal offers his opinion: “We do not know whether or not such a potential move is driven by internal pressures or moves to appease users/investors, but potential acquisition targets might have the upper hand valuation-wise in an industry which already realizes lofty valuation levels (who would have thought that 10X revenue could become “reasonable” at a certain point?).”
Eyal also points out that similar acquisitions have not always been successful. The analyst looks to Google’s $625 million of Postini in 2007, which didn’t prove to be successful. That aside, the analyst isn’t ruling out that any of the major companies that offer online security software could be called upon.
“Depending on the rationale, we would argue that almost every company is a potential acquisition target. PANW, FTNT and CHKP (yes, CHKP) could provide FB with a platform approach covering almost every network layer. OKTA, SAIL, CYBR and, to an extent, VRNS could be addressing the heightened importance of identity,” Eyal said.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Shaul Eyal has a yearly average return of 15.2% and a 65% success rate. Eyal is ranked #59 out of 4,887 analysts. The analyst specializes in analyzing cybersecurity companies.
You’re wondering about the stock? How is it doing amid the scary security breach? Out of 38 analysts polled by TipRanks in the last 3 months, 31 are bullish on Facebook stock while 6 remain sidelined and only is bearish. With a return potential of nearly 32%, the stock’s consensus target price stands at $203.19. (See FB’s price targets and analyst ratings on TipRanks)