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Needham upgrades Allot Communications shares to Buy, sees profitability by 2019

The analysts foresee double-digit growth, improving margins and profitability by next year

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The tech company has been transitioning to service provider network intelligence and security

Israeli tech company Allot Communications Ltd (NASDAQ:ALLT) started the week off on a positive note.

Needham analysts upgraded the software company’s shares to a Buy from Hold with a price target of US$6.35.

Analyst Alex Henderson boosted the shares’ rating citing the company’s transition from deep-packet inspection technology, or a way of managing network traffic, to service provider network intelligence and security.

In order to transition, the company had to move away from its hardware business to adopt cloud principles.

WATCH: Allot Communications turns focus to network security

“We have patiently watched the company transition, waiting for proof points that the strategy has taken hold. We are now convinced it has and foresee Allot delivering double-digit growth, improving margins and returning to profitability in CY19,” wrote Henderson.

A major proof-point for the analyst was that company’s investment in its software-as-a-service business.

Allot recently announced that its analytics system had been chosen by a Tier 1 Northern European mobile operator in an effort to boost customer loyalty and bring in new subscribers.

The unnamed mobile operator will use Allot ClearSee Network Analytics to manage its network performance and access real-time information about its business. An interactive traffic analysis dashboard shows bandwidth consumption, usage volume as well as the quality of streaming video.

Shares of Allot were up in Monday pre-market trading and continued to rise after the open, adding 1.5% to US$5.34.

 

Quick facts: Allot Ltd

Price: 10.65 USD

NASDAQ:ALLT
Market: NASDAQ
Market Cap: $369.91 m
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