By Seeking Alpha, Celan Bryant, on January 30, 2015


  • NetScout is a market leader in a hot and growing industry driven by regulatory change and the rise of cyber-threats.
  • In October, NetScout Systems announced its intention to acquire Danaher’s communications business in an all-stock transaction valued at $2.4 billion.
  • Investors reacted by selling the stock even though the deal is expected to be accretive within one year.
  • On both a GAAP and non-GAAP pro-forma basis the stock is undervalued. Investors should view this dip as a buying opportunity.

The last 20 years have been all about access to big data—what to do with it, where to store it, how to analyze it, and how to duplicate it. As organizations learned how to use “it” to their advantage, so did the need to encrypt it, protect it, and manage it remotely.

The implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the proliferation of hacker activity has fueled the data arms race as regulators increase security protocols around data access, particularly around financial or political intelligence. This is echoed by Timothy Massad’s recent remarks to the CME Global Financial Leadership Conference in which he refers to cyber-security as a threat to financial stability.

“We must also focus on cyber-security,” he says in the address, perhaps the single most important new risk to financial stability. Cyber-security and business continuity generally are important aspects of our oversight for futures and swaps markets. We will be focused on this issue in our examinations of clearinghouses and exchanges in particular to make sure they are doing all they can to address this risk.

The increase in regulation and cyber-threats has increased demand for network security and remote monitoring features for data centers across the globe.

Founded in 1984, and headquartered in Massachusetts, NetScout Systems, Inc. (NASDAQ: NTCT) is one of the most recognized brands in the network performance management industry. The technology is meant to provide increased visibility to organizational networks with performance analytics and operational intelligence.