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The Colonial Pipeline ransomware attack has triggered a flurry of commentary from Wall Street on security software vendors that could benefit from an intensified focus on preventing future attacks.
As has been widely reported, the Alpharetta, Ga.-based pipeline firm has been shut down by an attack that the Federal Bureau of Investigation blames on an organized-crime group called DarkSide. In a development the company claims isn’t related to the DarkSide attack, Colonial Pipeline’s website is currently down as well.
Colonial is one of the country’s largest pipeline networks, carrying about 3 million barrels a day of diesel, gasoline, and jet fuel across the eastern U.S. over its 5,500-mile network.
RBC Capital analyst Matthew Hedberg writes in a research note Tuesday that this is simply the latest in a string of high-profile cyberattacks and that issues of this magnitude are likely to force both the public and private sector to increase cybersecurity spending. He also sees a potential that the energy sector could accelerate its adoption of cloud computing.
“Essentially as public and private sectors look to digitally transform, a corresponding security transformation must also occur,” Hedberg writes. He argues that more federal funding to address security vulnerabilities is likely, and that the security vendors he follows that are likely to benefit from higher spending in response to breaches of this variety, including
(CRWD),
(OKTA),
(PANW), and
(ZS).
Evercore ISI analyst Irvin Liu writes that it is so far unclear what vulnerabilities were exploited in the attack, but that “the adoption of emerging technologies such as Zero Trust Network Access security architecture should help protect against recent threats.”
He writes that attacks of this variety are likely to continue and “with increased frequency and sophistication.” And for that reason, he expects a continued shift of IT dollars toward security. He sees benefits for
(CSCO),
(CHKP),
(FTNT), and Palo Alto Networks, among others.
Raymond James analyst
Pavel Molchanov
specifically sees benefits here for
(ITRI), a provider of hardware and software infrastructure for utilities. “Itron’s suite of software solutions includes cybersecurity, both in-house and via an industry partnership,” he writes. “Whenever high-profile headlines emerge about hackers targeting critical infrastructure, even if it is not grid-related, it should provide additional impetus for utility management teams to look at the options.”
Security stocks are trading mixed on Tuesday, with Palo Alto Networks up 0.4%,
up 2.5%, Fortinet up 0.4%, and Check Point down 0.5%. Itron is down 0.1%.
Write to Eric J. Savitz at eric.savitz@barrons.com
