Cyber stocks to watch amid the Russia-Ukraine tension, Dan Ives

The Black Swan event from the invasion, according to Wedbush Securities analyst Dan Ives in a research note given to GOBankingRates on Thursday, Feb. 24, will send shockwaves across global markets, with tech names expected to face substantial harm when the U.S. market opens.

Wedbush Securities has cautioned that as the West applies sanctions over Russia's developing issue with Ukraine, tech investors should be on the lookout for a surge in cyber warfare from the country.

Ives added that while each geopolitical shock event was new and unique, "our playbook since 2000 has been to leverage these periods of global upheaval to purchase the tech winners that we perceive as highly oversold in a panic-like selloff."

As a result of the ongoing cyber conflict, the cyber security sector is expected to grow, he said, adding that well-positioned suppliers should be a priority area for tech investors amid this market volatility.

“Based on our conversations over the last 48 hours with enterprises/CISOs and contacts in the Beltway, there is a growing concern that massive cyber warfare could be on the near-term horizon which would certainly catalyze an increase in spending around preventing sophisticated Russian-based cyberattacks going after datacenters, networks, vulnerability points, and other highly sensitive data,” Ives said in the note.

Palo Alto Networks, Zscaler, Crowdstrike, Tenable, Varonis, Fortinet, Telos, Mandiant, and CyberArk, according to Wedbush Securities, are the core cyber security companies most likely to profit from this increased Ukraine-driven APT (advanced persistent threat) investment.

CFRA Research reiterated its Buy recommendation on Palo Alto in updated research notes issued to GOBankingRates on Feb. 23.

Analysts like Ives believe it's still worthwhile to take the risk to get into the cybersecurity trade.

After Vladimir Putin recognized two separatist regions in Ukraine as autonomous and sent Russian soldiers into the nation on Monday, Western powers imposed sanctions. The steps, according to US President Joe Biden, are the start of a Russian invasion of Ukraine.

On Tuesday, Biden announced US sanctions against two Russian banks, several of Russia's political elites, and the country's sovereign debt.

Five Russian banks and three wealthy individuals have been sanctioned by the United Kingdom. According to the Guardian, the European Union is close to announcing its own restrictions, which include limiting the Russian government's ability to raise funds on EU financial markets.

These actions were viewed as reasonably measured by the market because they avoided penalizing Putin personally and did not penalize Russia's largest banks.

Wedbush said there are increasing odds of cyber attacks that might leave sensitive data unprotected, based on recent interactions with corporations and security professionals. It also wants businesses to invest in cyber-security to combat persistent threats.