By Michael Brush, MarketWatch
Cloud-based desktop virtualization systems store employee desktops remotely on servers instead of locally on devices. This helps remote employees access their work desktops from many different devices including PCs, smart phones and iPads, which makes it easier to work from home. The work-at-home trend will help companies that offer virtual desktop software like Citrix /zigman2/quotes/206700852/composite CTXS -3.94% , VMware /zigman2/quotes/209864107/composite VMW +1.07% and Microsoft, says Jefferies analyst Brent Thill.
As more people work at home, it’s easier for thieves and trouble makers to break into computer systems. So this trend will increase security spending. Thill says this will benefit CrowdStrike /zigman2/quotes/212513426/composite CRWD -2.35% , Varonis /zigman2/quotes/204126818/composite VRNS -1.36% , Palo Alto Networks /zigman2/quotes/207599953/composite PANW -1.33% , Okta /zigman2/quotes/210420951/composite OKTA -0.70% and Ping Identity /zigman2/quotes/214130089/composite PING -0.43% .
Increased communication from remote locations will boost internet traffic, putting a burden on network infrastructure and forcing telecom companies to increase investments in equipment. This will benefit Ciena /zigman2/quotes/208745450/composite CIEN +3.33% , Juniper /zigman2/quotes/207361368/composite JNPR +0.64% , Arista Networks /zigman2/quotes/206966450/composite ANET -0.89% and CommScope /zigman2/quotes/206734450/composite COMM -0.17% , says Jefferies analyst George Notter. The work-from-home trend should also benefit Equinix /zigman2/quotes/208927761/composite EQIX -1.08% , which is a data-center real estate investment trust, or REIT.
Higher demand for cloud servers, laptops and home computers, routers and communications-infrastructure equipment will boost demand for chips. Broadcom /zigman2/quotes/200646538/composite AVGO +1.07% and Inphi /zigman2/quotes/208445412/composite IPHI -0.49% are companies that have a lot of exposure to this trend, says Jefferies analyst Mark Lipacis.
The shares of two types of companies might not rise as much as the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.03% or the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.04% as the economy rebounds from the lockdown recession. First, if more people are working from home, the rebound in the economy won’t necessarily translate into demand growth for office space.
“We see the most downside for New York City office REITs such as SL Green /zigman2/quotes/208985878/composite SLG -1.36% , says Jefferies analyst Jonathan Petersen.
A recent study by Jefferies suggests 90% of women go makeup free while working from home. So increased work from home would exacerbate the trend toward using less makeup, already in place since 2018. Jefferies analyst Stephanie Wissink thinks elf Beauty /zigman2/quotes/202760864/composite ELF -2.23% will face headwinds because of this.
At the time of publication, Michael Brush had no positions in any stocks mentioned in this column. Brush has suggested ATVI, PLNT, LOW, HD, MSFT, and PANW in his stock newsletter, Brush Up on Stocks. Brush is a Manhattan-based financial writer who has covered business for the New York Times and The Economist Group, and he attended Columbia Business School.