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Palo Alto Plans to Strengthen Portfolio With Secdo Buyout

Zacks

Palo Alto Networks, Inc. PANW recently announced that it has entered into a definitive agreement to acquire Israel-based automated endpoint security provider, Secdo. Subject to customary closing conditions, the buyout is expected to complete in the acquirer’s third-quarter of fiscal 2018. Terms of the deal were kept under wraps.

Particularly, Palo Alto’s chairman and CEO, Mark McLaughlin, was optimistic about the “endpoint detection and response, or EDR, capabilities” that are expected to enhance the company’s solutions portfolio, once the integration is completed.

Also, Secdo’s unique “thread-level approach” of collecting and visualizing data provides better clarity, which optimizes the efficiency level of responding against cyber attacks. Furthermore, the company’s engineers are anticipated to enrich Palo Alto’s talent pool.

Acquisitions a Boon

We note that this is the company’s second acquisition announcement within a month. Prior to this, Palo Alto had acquired Evident.io — a public could security provider — in an all-cash transaction worth $300 million in mid-March.

In fact, the company has been strengthening its product portfolio via inorganic additions since a very long time. Over the last few years, Palo Alto has acquired entities like LightCyber, Cyvera and CirroSecure. These acquisition synergies have proved conducive to the company’s top line, which jumped 28% year over year to $542.4 million, in the second quarter of fiscal 2018.

Palo Alto Networks, Inc. Revenue (TTM)

Palo Alto Networks, Inc. Revenue (TTM) | Palo Alto Networks, Inc. Quote


Other Strategic Initiatives

Apart from acquisition, new product launches and increasing adoption of the company’s next-generation security platforms are beneficial for the company. Customer wins coupled with expansion of the existing customer base are added positives.

Moreover, Palo Alto’s strategic partnerships with the likes of VMware, Splunk and Citrix are encouraging. The company’s focus on selling a higher percentage of subscription-based services is also helping it to generate stable revenues while expanding margins.

To Conclude

Per a report by MarketsandMarkets, the cybersecurity market is expected to reach $231.94 billion by 2022. Going ahead, we expect Palo Alto to grab the growth opportunity to its fullest, courtesy of its wide range of solutions portfolio.

However, stiff competition from industry peers like Check Point Software CHKP, Cisco Systems CSCO, and Juniper Networks JNPR remains a concern for this Zacks Rank #3 (Hold) company.

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