Pipeline Shutdown Puts Cybersecurity in the Spotlight

Colonial Pipeline shut down on Friday following a ransomware attack. The pipeline moves about 45% of the fuel used in the Northeast from facilities in Texas. The company has a tentative date to restore operations by Friday, leaving the pipeline off for a whole week.

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  • The impact is raising gasoline prices and the possibility of shortages in some areas, but also bringing an eye once again towards cybersecurity companies.

    As the first cyberattack in the energy sector specifically, it’s clear that players in the sector large and small will look to beef up their cybersecurity capacity.

    Among the world of cybersecurity plays, a few players saw a boost following the attacks on Monday. The market selloff negated most of the gains, but it’s clear the market sees one potential winner in FireEye (FEYE).

    The company’s intelligence-based solutions are designed to prevent, disrupt, remediate and investigate cyber attacks using a variety of sources. Shares have beaten the market by 20 points in the past year, even as the company has remained unprofitable.

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  • Action to take: Even without this headline attack, cybersecurity spending is likely to rise. Attacks like this only increase the amount being spent, and a strong player like FireEye is likely to benefit from this spending trend.

    Investors may like shares here, especially at it looks like a tech play that can hold it own in a defensive market for tech right now. For traders, the September $25 calls, going for about $0.57, look like a play with strong upside potential in the coming weeks.


    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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