Typically when somebody threatens to do something, especially if it is Russian President Vladimir Putin, then you can pretty much count on it happening. Even before the outbreak of war in Ukraine, there were numerous channel threats coming from Russia, according to reports, citing the potential for cyberattacks and hacking against the United States. Recently the U.S. Department of Homeland Security warned of the potential for attacks and noted that U.S. organizations at all levels could face cyber threats stemming from “the potential for the Russian government to consider escalating its destabilizing actions” beyond Ukraine.
It just takes a moment for investors to remember the Russian cyber terror group DarkSide’s hack of the Colonial Pipeline in May of last year that effectively choked the transportation of oil to the eastern United States. Industry experts have warned in the past after such attacks that a prolonged shutdown of major U.S. pipelines could push gas prices higher and cause disruptions in eastern parts of the country. With oil and gasoline at the highest levels since 2008, a major shutdown now could spell disaster.
A new Goldman Sachs report notes that vigilance at every level (local, state and the federal) government to the top echelons of corporate America is now a massive priority to ensure cybersecurity. The report said this:
Recent macro events provide incremental budget support. As expected, recent events have resulted in a step change of severity for an already elevated threat environment. We could see some pull-forward in budget spending due to urgency that enterprises have in this environment; however, as we saw with the impact of recent events such as Solarwinds, Colonial pipeline, JBS, and Log4Shell, we anticipate greater support for spending as threats receive more prominent attention from the media, the government, and C-Level executives. The most critical near-term priority for enterprises should be security posture hygiene.
The analysts think that six top companies will benefit from the increased spending across the industry. One of the companies, Mandiant Inc. (NASDAQ: MNDT) is being bought by Alphabet, the parent company of Google, for $23 a share, so here we focus on the other five. Since not all of them are rated Buy at Goldman Sachs, it is important to remember that no single analyst call should ever be used as a basis to buy or sell a stock.
The cybersecurity giant has pulled back recently after a huge run and is offering an outstanding entry point. CrowdStrike Holdings Inc. (NASDAQ: CRWD) is a leader in the endpoint protection platform (EPP) market. EPP solutions help protect enterprises’ internet-connected devices from cyberattacks, and there is a market shift from signature-based on-premises solutions to cloud-based platforms that use machine learning.
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