Cantor Fitzgerald Initiates Allot Communications With Overweight Rating

Core Viewpoint - Allot Communications is transitioning from a network-intelligence provider to a security-focused consumer company, with security-as-a-service (SECaaS) as the main growth driver [1] Group 1: Financial Performance - SECaaS accounted for 28% of Allot's revenue, with annual recurring revenue increasing by 60% year over year in Q3 2025 [2] - Cantor Fitzgerald expects SECaaS to exceed 60% of total revenue over time, driven by carrier-led distribution and rising demand for security offerings [2] Group 2: Strategic Developments - Recent contract wins, including partnerships with Verizon Business and a large Tier-1 EMEA SG-Tera III deployment, provide multi-year visibility and potential upside to forecasts [3] - Allot's current trading valuation is approximately 3.8x estimated FY26 EV/sales, significantly lower than peers at around 7.4x [3] Group 3: Growth Potential - Expanding recurring revenue, high incremental margins at scale, and multiple growth catalysts support the potential for renewed growth and a valuation re-rating [3]