The Debate For Net Neutrality Is Hurting This Stock

Allot Communications LTD ALLT has fallen 18 percent 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 percent in the third quarter and is expected to rise 22 percent 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 18th, 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 percent success rate recommending stocks and a +2.5 percent average return per recommendation.

On December 19th, 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 percent success rate making recommendations with a +6.8 percent 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 10th. 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 percent success rate recommending stocks and a +0.01 percent average return per recommendation.

On average, the analyst consensus for Allot on TipRanks is Hold.

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