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

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. ZS
Palo Alto Networks, Inc. PANW
Tenable Holdings, Inc. TENB
CyberArk Software Ltd. CYBR
Fortinet, Inc. FTNT
Varonis Systems, Inc. VRNS
SailPoint Technologies Holdings, Inc. SAIL

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

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