Allot Ltd. Secures Major Telecom Deal, Raises Price Target to $15

Northland has raised Allot Ltd.'s price target to $15 from $13, maintaining an Outperform rating. This follows a major telecom deal, which is expected to increase product revenue for fiscal 2026 to $47 million. Analysts foresee Allot replacing AppLogic at Orange, a telecom provider serving France, Spain, and other regions. Based on 1-year price targets, the average target price for Allot is $15, implying a 66.67% upside from the current price.

Allot Ltd. (ALLT) has secured a significant deal with a Tier-1 EMEA telecom operator, marking a strategic milestone for the company. The multi-year agreement, valued at tens of millions of dollars, underscores Allot's position in the growing converged network security market [1]. This deal is expected to boost product revenue for fiscal 2026 to $47 million, according to analysts [2].

The agreement, facilitated by Allot's "security-first" strategy and scalable SG Tera-III platform, exemplifies the company's ability to deliver integrated solutions that merge network intelligence with cybersecurity. The platform powers a suite of services including traffic management, policy control, network analytics, and advanced defenses against DDoS attacks, botnets, and other threats [1].

The SG Tera-III platform, described as the highest-capacity multiservice gateway in the market, is the linchpin of Allot's value proposition. By unifying cybersecurity and network management on a single platform, it reduces complexity for telecom operators managing both fixed and 5G/4G networks. The deal's multi-year structure ensures steady revenue recognition, while its scalability allows Allot to expand services without incremental costs proportional to customer size—a key source of operational leverage [1].

The deal also validates Allot's strategic pivot toward recurring revenue streams through its Security-as-a-Service (SECaaS) model. In Q1 2025, SECaaS revenue surged 49% year-over-year to $5.1 million, while SECaaS Annual Recurring Revenue (ARR) reached $21.2 million—a 54% increase [1]. The EMEA Tier-1 deal, along with partnerships like Verizon Business's My Biz Plan (which auto-enrolls 30 million subscribers into Allot's cybersecurity services), positions the company to sustain this momentum.

Northland has raised Allot Ltd.'s price target to $15 from $13, maintaining an Outperform rating. This follows the major telecom deal, which is expected to increase product revenue for fiscal 2026 to $47 million. Analysts foresee Allot replacing AppLogic at Orange, a telecom provider serving France, Spain, and other regions. Based on 1-year price targets, the average target price for Allot is $15, implying a 66.67% upside from the current price [2].

The deal's financial terms, while not disclosed in full, likely include a mix of upfront fees and subscription-based SECaaS payments. This structure aligns with Allot's goal of achieving 50%+ annual growth in SECaaS revenue and ARR for 2025. With EMEA contributing 72% of Q1 revenue, the region remains a critical growth engine, but Allot's partnerships in North America (e.g., Verizon) and emerging markets suggest diversification potential [1].

Investors should note Allot's reliance on a few large clients (customer concentration risk) and regulatory hurdles in EMEA. However, the Tier-1 deal's reference-case value—showcasing Allot's capability to large operators—should mitigate this risk over time. Competitor pressure from giants like Cisco or Palo Alto is real, but Allot's niche focus on telecom-specific security and its early 5G deployments provide a defensible edge [1].

Allot's Q1 2025 results and the Tier-1 EMEA deal reinforce its trajectory as a high-growth, recurring-revenue cybersecurity play in the telecom sector. With SECaaS ARR expanding at 50%+ rates and the SG Tera-III platform scaling across key markets, the company is well-positioned to capture the $10+ billion opportunity in telecom cybersecurity by 2027 (per industry estimates) [1].

References:
[1] https://www.ainvest.com/news/allot-strategic-momentum-emea-telecom-cybersecurity-buy-operational-leverage-recurring-revenue-2507/
[2] https://www.marketscreener.com/quote/stock/ALLOT-LTD-36713/news/Allot-Ltd-Signs-Deal-with-Tier-1-EMEA-Telecom-Operator-Valued-at-Tens-of-Millions-of-Dollars-50446024/