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Allot earns $12 price target as Frost & Sullivan initiates coverage

The research firm expects revenue growth from each of Allot’s two primary offerings: Network Intelligence and Network Security

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The company brought in non-GAAP revenue of $96 million in 2018, up from $82 million in 2017 and $91 million in 2016

Allot Ltd’s (NASDAQ:ALLT) Mobile Network Security operations are a “growth engine” that could help propel the company to significant revenue increases over the next few years, according to analysts at Frost & Sullivan. 

The comment came as the research firm initiated coverage of the Israeli network intelligence and security company on Sunday, issuing a price target of $12 for the stock.

Investors took notice, sending Allot's share price 1.7% higher in New York on Monday to $7.99.

The Frost & Sullivan analysts said they expect revenue growth from each of Allot’s two primary offerings: Network Intelligence and Network Security.

READ: Allot seeing rising demand for its network services from regulatory agencies around the globe

“The Network Intelligence solution brings in a constant and steady stream of revenues which according to our evaluation will show low two digit growth in the next two years and then transition to high one digit growth,” the analysts added.. 

“The second offering, Mobile Network Security, is a relatively new and growing business which we expect to have significant high double digit CAGRs in the next five years based on Allot's reputation, deep know how on a global scale, and the high potential of the RevShare model.”

The analysts noted that the company is transitioning from a capital expenses (CAPEX) business model to a revenue sharing business model, which it believes will further boost top line growth.

What will ultimately allow Allot to enlarge its footprint is the company’s network agnostic effort to give telecommunications providers the option to offer their subscribers additional security, the Frost & Sullivan analysts said.

“Allot has made a strategic decision to focus its marketing and sales efforts on Mobile Network Security reaching out to what seems like the blue ocean of cyber security,” they noted. “This offering enables telecom providers to offer security as a service (SECaaS) as a value added service to their subscribers. As more subscribers protect their devices both telecom providers and Allot experience increased monthly revenue.”

The analysts pointed out that Allot brought in non-GAAP revenue of $96 million in 2018, up from $82 million in 2017 and $91 million in 2016. Its 2019 second quarter revenue was $26.6 million, 15% higher than the $23 million it reported in the same quarter of 2018. 

Contact Andrew Kessel at [email protected] 

Follow him on Twitter @andrew_kessel

Quick facts: Allot Ltd

Price: 8.52 USD

NASDAQ:ALLT
Market: NASDAQ
Market Cap: $293.02 m
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