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Hawk’s Nest

Bulls Target Small-Cap Cyber Security Stock

by | Apr 1, 2022

KnowBe4 (KNBE) seeing 1,500 April $20 calls bought on 3/31 and follows 1000 May $22.50 calls bought on 3/17, interesting action for the small-cap that is forming a wide base. Shares have run back into March VPOC and strong short-term trend above the 8-EMA. A pullback to the top of April value at $22 would setup a nice push out of this range to $30. The $4B company trades 11.4X EV sales with mid-30% growth, attractive margins, and positive FCF. KNBE provides a security awareness training and simulated phishing platform that enables organizations to assess, monitor, and minimize the ongoing cybersecurity threat of social engineering attacks. KNBE is benefitting from growing risk of ransomware attacks and 85% of all data breaches involved a human element which is drawing greater awareness to spending on security awareness and phishing analysis. Analysts have an average target for shares of $28 with a Street High $40. Piper positive on 1/6 noting that many of the demand drivers that positively impacted cybersecurity spending in 2021 remain in play as we enter 2022 while the IT spending outlook with security prioritization forecasted to continue in 2022. Goldman Sachs upgrading to Buy in November citing expectations demand will remain strong as human interaction remains a critical point of risk while enterprises continue to face a deteriorating global IT threat environment. They see upside in 2022 driven by improving large enterprise traction, expansion into adjacent markets and healthy unit economics. Short interest is 1.65%. Whale Rock is a top holder with 1.25M shares.