These cybersecurity stocks could be most hurt by Hamas's attack on Israel

By Tomi Kilgore

Check Point Software's stock falls as J.P. Morgan notes more than half its office space is in Israel

J.P. Morgan analyst Brian Essex listed a number of security software companies with ties to Israel, in anticipation of investor interest in those with exposure to the region, after Hamas' attack on Israel over the weekend.

"As events continue to evolve, we believe companies with operations in Israel are well prepared to manage geopolitical disruption in the region, but we would not be surprised to see headlines pressure more exposed stocks within our coverage universe," Essex wrote in a Monday note to clients.

Shares of Check Point Software Technologies Ltd. (CHKP) dropped 3.4% in premarket trading, after rallying 3.2% amid a three-day win streak through Friday.

The company has the "most meaningful exposure" of those Essex covers, as it is headquartered in Tel Aviv, with 60% of its office space and 42% of its employees in Israel at last count.

Also read: Israel declares war, bombards Gaza as Hamas says it has more than 100 hostages.

CyberArk Software Ltd. shares (CYBR) shed 2.7%, a day after it shot up 5.8%.

Essex said the company maintains a "substantial presence" in Israel, as it has one of its headquarters in Tel Aviv and 71% of long-lived assets in the country. The number of employees the company has in Israel is undisclosed.

SentinelOne Inc.'s stock (S) slumped 1.5%, and was the most actively traded of the group ahead of the open, as the California-based company has "relatively meaningful" exposure to Israel.

"While not headquartered in the country, SentinelOne maintains of its 44% long lived assets in Israel, with a portion of [research and development] based in Tel Aviv," Essex wrote.

"Israel has been the source of a substantial amount of talent, development, and innovation over the years and, as a result, several companies within our coverage universe maintain a meaningful presence in the country," Essex wrote.

The First Trust Nasdaq Cybersecurity ETF CIBR was little changed in light premarket trading, while futures (ES00) for the S&P 500 index SPX declined 0.6%.

Elsewhere, shares of Palo Alto Networks Inc. (PANW) gave up 0.9%, as Essex noted that "several" of the California-based company's acquisitions have been based in Israel and the company has about 12% of its long-lived assets in the country.

Shares of Rapid7 Inc. (RPD), which has an R&D office in Tel Aviv, were still untraded in the premarket; of Tenable Holdings Inc. (TENB), which conducts R&D operations in Israel and recently acquired a cloud security company headquartered in Tel Aviv, were indicated down more than 2%; and of Zscaler Inc. (ZS), which conducts R&D operations in Israel of an undisclosed size, edged up 1%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-09-23 0758ET

Copyright (c) 2023 Dow Jones & Company, Inc.