Update: Lehman Starts Coverage of Seven Internet Security Companies

Updated from 11:28 a.m. ET

Lehman Brothers initiated coverage of the Internet security sector Thursday, saying it expects it to be among the "best performing sectors in technology" in the next one to two years.

"In order for the Internet to achieve its vast commercial potential, we believe that a comprehensive security infrastructure must exist in order to establish the requisite level of trust and confidence for conducting large scale business transactions online," the firm wrote in a research note. It expects the Internet security software market to reach $13.3 billion by 2004.

Lehman said this sector should "experience rapid growth" because of concerns over Internet security, strong industry fundamentals, an increase in corporate security budgets and little evidence of a slowdown in spending in the sector. It said the sector should benefit from a long period of sustained growth that is independent of economic cycles.

The firm initiated coverage of Check Point (CHKP Quote - Cramer on CHKP - Stock Picks) and Internet Security Systems (ISSX Quote - Cramer on ISSX - Stock Picks), both with strong buy ratings. It started coverage of RSA Security (RSAS Quote - Cramer on RSAS - Stock Picks) and VeriSign (VRSN Quote - Cramer on VRSN - Stock Picks) with buy ratings, and Network Associates (NETA Quote - Cramer on NETA - Stock Picks), Symantec (SYMC Quote - Cramer on SYMC - Stock Picks) and Entrust Technologies (ENTU Quote - Cramer on ENTU - Stock Picks) with market perform ratings.

Shares of Check Point leaped $7.13, or 7.9%, to $97.31, and Internet Security Systems jumped $7.25, or 10.6%, to $75.81 in recent Nasdaq trading. VeriSign rose $3.63, or 5.8%, to $66.25, and RSA Security gained $1.81, or 3.3%, to $57.50. Shares of Symantec were up $2.56, or 5.1%, to $52.88 and Entrust rose 50 cents, or 4.4%, to $11.75. Network Associates gained 28 cents, or 4.7%, to $6.32.