Cisco Systems, Inc. (CSCO) and Juniper Networks, Inc. (JNPR) are two legacy players in the tech arena that are set to gain market share in the cybersecurity segment if they put their large balance sheets to work by acquiring small, fast-growing companies, says Jonathan Ho, Analyst at William Blair & Company, L.L.C.
“Cisco (CSCO) and Juniper (JNPR)…have broad distribution capabilities and they have large balance sheets. These legacy companies can potentially put their balance sheets to work by buying some of the smaller companies that are out there that are growing very fast and have very solid technology, but don’t have the distribution and execution capabilities that the larger organizations have,” Ho said.
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Ho says that cybersecurity as a theme is becoming more broadly recognized, as organizations continue to try and resolve security challenges and therefore increase their spending. This sets up players such as CSCO and JNPR to acquire smaller high-growth companies, which Ho recommends investing in due to their enhanced technologies and acquisition potential.
“Our perspective is that we’re more attracted to the faster-growth companies in the space and believe that that’s where investors can benefit, not just from the secular growth trends where companies are buying newer technologies but also benefit from the potential for acquisitions particularly from the sector as well,” Ho said.
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