These are the cybersecurity stocks to buy as Russia attacks move online

Published Fri, Feb 25 20222:41 PM ESTUpdated Fri, Feb 25 20225:54 PM EST

With the conflict on the ground in Ukraine and the anticipation of a Russian cyberattack on U.S. infrastructure, investors are turning their attention to cybersecurity stocks. No one has a crystal ball for how the current geopolitical tensions will play out, but investors agree that the risk has become greater and may continue to going forward. The history of cybersecurity incidents linked to Russia only adds to the concern. "Regardless of your view on how this unfolds, it's clear the world is entering a new much more hostile world and cyber is a big part of the geopolitical spectrum of hostilities," Needham analysts said in a note Thursday. "Enterprises and governments are confronted by new threats and heightened risks… In this environment, we think there is likely increased spend on Security technologies and likely a shift in some spending priorities." By Friday, the second day of the Russian invasion of Ukraine, cybersecurity stocks logged big weekly gains. Palo Alto Networks climbed more than 16%, and Crowdstrike rose 8%. Meanwhile, the ETFMG Prime Cyber Security ETF rose about 3% and the First Trust NASDAQ Cybersecurity ETF added about 4% on a weekly basis. The Global X Cybersecurity ETF gained a whopping 130% this week. "The cybersecurity industry will become increasingly critical as organizations globally will review and address any deficiencies in their overall cybersecurity posture, particularly for those that have underinvested in security," Evercore ISI analysts said in a note Thursday. Here are some of the stocks Wall Street sees as beneficiaries of this renewed focus on cybersecurity. "Combined with the current shortage of cybersecurity professionals in the industry, we see increasing interest in products that embed automation and AI/machine learning capabilities that proactively detect, cross-correlate, remediate cyber-related incidents," the Evercore analysts said. Check Point Software, Cisco Systems, Cloudflare, Fortinet and Palo Alto Networks are highlights for Evercore ISI's analysts. Check Point is up 20% this year, while Palo Alto has gained just about 1% and the others are down at least 10%. For Needham, "first line beneficiaries" include CrowdStrike, Rapid7, Tenable Holdings, CyberArk and SentinelOne. Its $340 price target on Crowdstrike implies about 88% upside.

Signage outside Palo Alto Networks headquarters in Santa Clara, California, U.S., on Thursday, May 13, 2021.

David Paul Morris | Bloomberg | Getty Images

With the conflict on the ground in Ukraine and the anticipation of a Russian cyberattack on U.S. infrastructure, investors are turning their attention to cybersecurity stocks.