Could cybersecurity specialist Palo Alto Networks ( PANW ) join Symantec ( SYMC ) in making acquisitions that reshape the market? At least one analyst thinks so.
[ibd-display-video id=2322987 width=50 float=left autostart=true] As it laid out its vision for how the computer security market will evolve at an analysts meeting in New York on Wednesday, Palo Alto updated its product strategy but made no major changes to guidance or long-term targets. But Brad Zelnick, an analyst at Credit Suisse, says Palo Alto may look to boost growth with a big acquisition.
"We expect the company to propel itself into the future via a significant acquisition, perhaps by rounding out its visibility feature set with a target such as ForeScout, Gigamon ( GIMO ), or even Tanium," Zelnick said in a note to clients.
Mountain View, Calif.-based Symantec acquired Blue Coat Systems in 2016 for $4.65 billion. Symantec also purchased LifeLock, a provider of consumer identity-theft protection services, for $2.3 billion. Symantec recently has been eyeing Splunk ( SPLK ), according to a Bloomberg report.
Palo Alto competes in the corporate security firewall market vs. Cisco Systems ( CSCO ), Check Point Software Technologies (CHKP) and Fortinet (FTNT). Firewalls block unauthorized traffic from entering a private network and monitor web-based applications.
One view is that Palo Alto's share gains vs. those of Cisco and Juniper Networks (JNPR) have slowed. Palo Alto has partnered with Proofpoint (PFPT), Splunk and Tanium in some security areas.
Some analysts say that the security industry's bigger incumbents could target privately held companies, such as Zscalar, before a new wave of initial public offerings.
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Palo Alto stock edged up a fraction to close at 140.69 on the stock market today . Palo Alto reported fiscal fourth-quarter earnings and revenue on Aug. 31 that topped expectations, but other recent quarterly reports have disappointed. Palo Alto stock is down 14% from early November 2016.
Andrew Nowinski, a Piper Jaffray analyst maintains an overweight rating on Palo Alto with a price target of 155 following the investor day.
"Palo Alto has a large opportunity to cross-sell additional products within the installed base, as Palo Alto is only capturing 10-15% of the installed base's current security wallet share," he said in a report. "We continue to believe the company has the most comprehensive platform in the industry, which should enable growth above 20% for the foreseeable future."
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