NCC shares upgraded by broker on security business boom

Broker Peel Hunt recommends shares of security specialist, says UK firms are undervalued

Brokerage firm Peel Hunt has upped its valuation for shares in NCC, the London-listed security and testing firm which has reported a doubling of security “incidents” reported to it over the past year.

Peel Hunt cited a number of key shifts in the marketplace for cyber-security services amounting to a: “Substantial broadening of the approach taken to cyber-security towards a full-loop of prevention, protection, detection, reopens and review.” The broker added: “There is a clear market opportunity for vendors to increase their market share of wallet.”

Furthermore, said the broker, UK cyber-security business are trading on a material discount to their US peer group, and this discount will narrow given the level of consolidation in both fintech and cyber-security markets.

Another positive, according to Peel Hunt, was NCC’s 2015 acquisition of Fox-IT, a threat intelligence specialist based in the Netherlands with around 250 employees. Threat intelligence, according to Peel Hunt, is “A key emerging market, and assets in this segment are relatively few and far between.”


Rob Cotton, NCC

NCC Group’s chief executive Rob Cotton announced improved results for the half year to January 16th, with adjusted operating profits increasing 26% to £15.7m (£12.4m in 2014). According to Cotton: “The rate and complexity of cyber-crime has grown at a faster rate than anyone expected. For example, our managed security scanning and monitoring service identifies over 10,000 incidents a day – twice as high as this time 12 months ago.”

According to Ollie Whitehouse, technical director at NCC, the definitions of those incidents cover everything from attempted opportunistic intrusions and malicious code outbreaks such as CryptoLocker, the ransomware trojan targeted at Windows users, “at the low end”  to “sophisticated threat actors” attempting to breach customers’ IT infrastructures.

NCC’s share price is remains well down on its April 2015 peak of £1.15, however, trading at £0.72p on March 3.


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