this ‘mispriced subset of technology’ has 20% upside

Cybersecurity has been a disappointing investment in recent months, as evidenced by the First Trust Nasdaq Cybersecurity ETF (CIBR) that’s down 20% from its high in mid-November, but Dan Ives expects that to change in the not-so-distant future.

Highlights from Ives interview on CNBC’s ‘Power Lunch’

According to Wedbush Securities’ managing director, cybersecurity is one of the most mispriced subset of technology at present. This afternoon on CNBC’s “Power Lunch”, Ives said:

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Cybersecurity could grow by 20%. The Russia-Ukraine situation, I think it’s cyber warfare, it’s already begun. That could increase cybersecurity by another two-to-three hundred bps across the board. And it’s just tip of the iceberg, in terms of threats we’ll see over coming weeks and months.

Ukraine had several of its banks and government websites hit by a denial-of-service attack, revealed the head of Ukraine’s Ministry of Digital Transformation, Mykhailo Fedorov on Wednesday.

Cybersecurity stocks that he likes at current valuations

Cybersecurity, as per the Wedbush expert, is stronger now than it’s been in about a decade. He sees the underperformance as temporary, related only to the broader sell-off in technology as a whole.

Commenting on which stocks will benefit the most from cyber warfare, Ives said:

CrowdStrike Holdings, that’s the golden child. That, along with Zscaler Inc, are really going to benefit here. And then I look at names like Palo Alto Networks that is also very well-positioned in terms of the cybersecurity trends that we are seeing.

Tenable Holdings and CyberArk Software are among other cybersecurity stocks he likes at current discounted valuations. A day earlier, Palo Alto reported its financial results for the second quarter that easily topped Wall Street expectations.