Why The Ukraine Conflict Will Augment This Sector's Growth By 2-3%

The Ukrainian crisis is widely expected to have a modest negative impact on multinationals with exposure to the eastern European country. An analyst at Wedbush, meanwhile, sees the cybersecurity sector as a potential beneficiary of the adversity.

Brace For More Cyberattacks: Russian state-sponsored organizations could step up cybersecurity attacks on U.S. and European governments and enterprises over the coming months, analyst Daniel Ives said in a note.

This has added growth tailwinds for the cybersecurity sector, the analyst said. Well-positioned vendors should therefore be a focus sector for tech investors during the current market turmoil, he added.

Massive cyber warfare could be in the cards in the near term, the analyst said. This would catalyze a surge in spending around preventing "sophisticated Russia-based cyberattacks," targeting datacenters, networks, vulnerability points and other highly sensitive data, he added.

Related Link: Zscaler Offers 'Better Protection,' Wells Fargo Says In Bullish Take

Cybersecurity Names Primed For Modest Upside: The cybersecurity sector is likely to see about 2-3% of additional growth from the Ukraine crisis, Ives said. These companies were already positioned to see 20% year-over-year growth in 2022 due to the accelerated move to the cloud and heightened threats facing enterprises/governments, the analyst noted.

Ives sees the following companies as the most likely beneficiaries of the incremental Ukraine-driven spending.

Zscaler, Inc. (NASDAQ:ZS)
Palo Alto Networks, Inc. (NASDAQ:PANW)
Tenable Holdings, Inc. (NASDAQ:TENB)
CyberArk Software Ltd. (NASDAQ:CYBR)
Fortinet, Inc. (NASDAQ:FTNT)
Varonis Systems, Inc. (NASDAQ:VRNS)
SailPoint Technologies Holdings, Inc. (NYSE:SAIL)

Meanwhile, First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) was trading  1.11% to $46.40 on Wednesday morning.

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