Cybersecurity company ForeScout Technologies Inc. (Nasdaq: FSCT) is expanding and hiring new employees for its development center in Tel Aviv, sources inform “Globes.” The company currently has 20% of its 1,100 employees worldwide in Tel Aviv, and is believed to be planning to increase the number by dozens in the near future.
ForeScout provides solutions for the security and control of connected devices in organizations. The company does not connect its security solution to the end-user devices in an organization; it provides solutions that provide customers with visibility for what is being done on their network and enables them to set security policy. ForeScout was founded by chairperson Yehezkel (Hezy) Yeshurun, chief research officer Oded Comay, chief architect Dror Comay, Dror Shikmoni, and Noga Alon. The company’s CEO and president is Michael DeCesare, and its headquarters are in the US. Its Tel Aviv development center had 171 employees when it held its Nasdaq IPO, and has since grown to an estimated 220 employees.
Recommendations: 23% higher than its share price
When it was a private company, ForeScout was labeled a unicorn – a company worth over $1 billion, although its value in its 2017 IPO was only $814 million, after money. Its market cap has since doubled to $1.7 billion. Its current share price is $38.70, compared with $22 in its IPO and $29 in its secondary offering a year ago. At the same time, the share price has fallen from its $46.40 peak a month ago, at which point its market cap was over $2 billion.
The analysts covering the ForeScout share believe that the company’s value has the potential to grow. Of the 12 analysts covering it, 11 recommend “Buy” or “Market outperform” for the share and one recommends “Neutral;” not a single one recommends “Sell.” The analysts’ average target price is $47.60, 23% higher than the current market price on Nasdaq.
One of these analysts, Melissa Franchi, raised her target price for the share from $42 to $46 following an analysts day held by ForeScout several weeks ago, with an “Overweight” recommendation. She says that the market targeted by ForeScout is large and growing, and the company has a developing portfolio of products that meets the market’s needs. She estimated ForeScout’s targeted market at $27 billion, compared with $10 billion when it held its IPO, and noted that the company’s positioning in the visibility market was becoming more and more strategic. “As more devices join the organizational network, ForeScout expects visibility and network oversight to become a top priority of information systems managers and technology managers of organizations,” she writes. Morgan Stanley therefore projects at least 20% growth in the company’s revenue in the coming years.
ForeScout’s revenue totaled $298 million in 2018, 32.6% more than in 2017. According to GAAP rules, the company is still far from making a profit, but it reduced its net loss attributable to shareholders by 20% to $74.8 million. According to non-GAAP accounting, which excludes various accounting items, the company lost $17.4 million in 2018, compared with $37.4 million in 2017, and was close to breaking even in the fourth quarter. The largest shareholders in ForeScout are Amadeus Capital Partners (9.2%) and Pitango Venture Capital (6.7%), which invested in the company before its IPO. The two funds took advantage of the boom in ForeScout’s share following the IPO to sell part of their holdings in the company.
Published by Globes, Israel business news – en.globes.co.il – on April 23, 2019
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