Goldman Is Buying Secureworks, Sees 27% Upside

Goldman Sachs' Gabriela Borges initiated Secureworks Corp SCWX at Buy with a price target of $17.50.

"We believe Secureworks is uniquely positioned to gain [market] share at the intersection of two secularly growing verticals: security and IT outsourcing/managed service" Borges said. The analyst cited increased complexity of security infrastructures and a shortage of qualified professionals to manage them as the main catalysts.

Related Link: JPMorgan Initiates Coverage On SecureWorks At Overweight, Announces $18.00 PT

Due to these reasons, the Goldman Sachs analyst saw "steady 20+ percent revenue growth while executing on operating leverage" with revenue targets of $420.50 million for 2017. Although the bank estimated EPS to be negative in 2017 and 2018 at $(0.61) and $(0.26) respectively, "we believe 20+ percent EBITDA margins are reasonable" in three to five years.

To reflect the long-term profitability track, Borges estimates a positive EPS of $0.05 for 2019.