Allot Communications LTD (ALLT, Financial) has fallen 18% in the past month as a result of President Obama calling for the “strongest possible rules” to protect the open Internet, explicitly banning paid prioritization.
To put it simply, Obama’s proposal prohibits the blocking of websites, slowing of Internet content, and deals that let companies pay for faster delivery of their content.
However, Allot has been bringing in new business by marketing other uses of its technology that doesn’t violate Obama’s Internet regulations. In fact, Allot’s revenue has increased 26% in the third quarter and is expected to rise 22% this year. It is for this reason that analysts like Wunderlich’s Matthew Robison are bullish on the stock.
Robison gave Allot a Buy rating and a $16 price target on December 18, stating that although “The market’s viewing Allot very inefficiently,” the stock is “actually one of our favorite stocks going into 2015.” The analyst believes Allot has “made some great strides on the product side to get into analytics and security, and achieve a broader market opportunity for their core technology.”
Robison currently has a 48% success rate recommending stocks and a +2.5% average return per recommendation.
On December 19, Dougherty & Co. analyst Catharine Trebnick also gave Allot a Buy rating with a $16 price target, noting “All the expectations are out of it, this thing can perform… There’s still some really good stuff in there, but it’s been lost in all the other big macro headwinds.”
Trebnick currently has a 63% success rate making recommendations with a +6.8% average return.
On the other hand, Bank of America analyst Tal Liani was not so optimistic on Allot, becoming bearish on the stock on December 10. The analyst explained, “Allot’s key investment theme has simply not materialized… A few recent large deals have masked notable underlying weakness.”
Liani currently has a 49% success rate recommending stocks and a +0.01% average return per recommendation.
On average, the analyst consensus for Allot on TipRanks is Hold.
