Wunderlich Forecasts Long-Term Growth for Allot, Raised PT

In a report published Friday, Wunderlich Securities analyst Mathew Robison raised the price target on

from $16.00 to $18.00 forecasting long-term growth for the company. Robison noted that the “scope of opportunities” has continued to develop since Allot last reported. The analyst commented, “The wave of early adopter deep packet inspection (DPI) platform investment that drove rapid growth in 2010-12 is now being augmented by feature upgrades and expansion to later adopters. We expect this to continue, along with traffic capacity upgrades with LTE volume. Also, with voice-over-LTE making traditional toll traffic (voice) yet another data application, we expect more focus on DPI-derived application/traffic management.” Wunderlich added that Allot is increasing their platform width with video optimization, steering/ load balancing, and content caching. Further, bookings have doubled to approximately 30% of total for features more related with customer revenue. Despite these gains in revenue, Robision commented that this “means longer approval/invoicing cycles that increasingly involve customer marketing oversight in addition to that of network operations.” Robison expects operating margin to scale beyond 2014. Wunderlich kept 2014 estimates unchanged and believes that Allot is staffed to deliver growth for this year. The analyst's data suggest that expenses will grow at one third of the rate for sales over the next two years supporting operating margins in the high teens. Shares of Allot Communications closed at $15.14 on Thursday.