In a report released today, Gray Powell from BTIG upgraded A10 Networks to a Buy, with a price target of $22.00.
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Gray Powell has given his Buy rating due to a combination of factors that highlight A10 Networks’ strong financial performance and growth potential. The company reported a better-than-expected second quarter, with revenue surpassing both the firm’s and market estimates, driven by improvements in the service provider segment. This performance has increased confidence in A10 Networks’ ability to achieve high-single-digit growth this year, with potential for sustainable double-digit growth in the future.
Moreover, A10 Networks is benefiting from increased demand for its infrastructure and security products, particularly in AI-related data center build-outs, as evidenced by a significant renewal with Microsoft. The company’s security revenue mix is also improving, with security products expected to grow at a faster rate than infrastructure products. Despite a slight miss in services revenue, management anticipates recovery in the coming quarters. The valuation remains attractive, with the stock trading at a compelling multiple compared to its growth peers, supporting the Buy rating and a price target of $22 per share.
According to TipRanks, Powell is a 5-star analyst with an average return of 10.1% and a 56.25% success rate. Powell covers the Technology sector, focusing on stocks such as Palo Alto Networks, Zscaler, and CyberArk Software.