Allot Rises 15% in 3 Months: Should You Hold or Fold the Stock?

Allot Ltd. ALLT shares have gained 15.2% in the past three months, outperforming the Zacks Computer and Technology Sector’s appreciation of 0.5%. The stock has outperformed its peers, including Check Point Software CHKP, Fortinet FTNT and Palo Alto Networks PANW. In the past three months, shares of Fortinet have gained 4.1%, while shares of Check Point Software and Palo Alto Networks have lost 10.6% and 20.4%, respectively.

The outperformance of Allot’s share price raises the question: Should investors continue holding ALLT stock, or is it time to book profits?

3-Month Price Return Performance

Allot to Benefit From Strong SECaaS Momentum

Allot is seeing steady progress in its SECaaS business, which is becoming the company’s main growth driver. In the third quarter of 2025, SECaaS annual recurring revenue (ARR) increased 60% year over year. The growth was primarily driven by higher adoption from telecom partners and more end users signing up for security services.

SECaaS made up around 28% of Allot’s total revenues in the third quarter. Looking ahead, management expects this share to move closer to 30% if current trends continue, which bodes well for the company's prospects in the upcoming quarters. This is crucial because SECaaS is a subscription-based offering, which makes revenues more predictable. Recurring revenues accounted for 63% of total revenues in the third quarter compared with 58% a year ago, showing a gradual improvement in revenue quality.

During the third quarter earnings call, management outlined a few clear drivers behind SECaaS growth. Large Tier-1 telecom customers that launched services in recent quarters are continuing to add new subscribers, which is driving demand for Allot’s solutions. Existing customers are also buying additional services over time, which supports upselling. Allot is also introducing new offerings, such as OffNetSecure, which allows protection even when users are off the operator’s network. This broadens the use of SECaaS and could help increase revenue per user over time.

Considering a strong demand for its solutions and a better-than-expected third-quarter performance, Allot raised its guidance for 2025. The company now expects 2025 revenues to be in the range of $100-$103 million, up from its previous guidance of $98-$102 million. Allot raised its guidance for SECaaS ARR growth as well. The company now expects SECaaS ARR growth to surpass 60% on a year-over-year basis, up from its prior guidance of 55-60%.

If telecom partners continue to scale these services and user adoption remains steady, SECaaS momentum could continue to support ALLT’s overall growth in the coming quarters. The Zacks Consensus Estimate for 2026 indicates revenue growth of 13.3%.

Valuation: Allot Trades Below Sector and Peers

Despite its strong growth, ALLT stock still looks reasonably priced. Allot is currently trading at a lower price-to-sales (P/S) multiple compared to the sector. Allot’s forward 12-month P/S ratio sits at 4.27X, lower than the sector’s forward 12-month P/S ratio of 6.54X.

Allot Forward 12-Month P/S Ratio

Allot stock trades at a lower P/S multiple compared with its peers, including Check Point Software, Fortinet and Palo Alto Networks. At present, Check Point Software, Fortinet and Palo Alto Networks have P/S multiples of 6.85X, 8.4X and 10.27X, respectively. This discount adds to the appeal for long-term investors.

Allot Faces Stiff Competition

Allot’s SECaaS business is scaling rapidly across telecom customers and contributing to total revenue growth. However, it competes with well-established companies in network traffic management and security space, such as Check Point Software, Fortinet and Palo Alto Networks.

Fortinet recently updated its FortiCNAPP cloud security platform to bring together cloud posture, identity access, vulnerabilities, data risk and network security into a single view. Runtime checks help teams separate theoretical risks from issues that can actually be exploited. This allows faster fixes using fewer tools. FortiCNAPP factors in network protection when assessing cloud workload risk. If FortiGate firewalls are already protecting a workload, that protection is reflected in the risk score. This helps security teams focus on real risks instead of dealing with too many alerts.

Check Point Software's Quantum Firewall Software, R82.10, focuses on improving hybrid network security for its customers. CHKP's R82.10 provides consistent protection across offices, cloud environments, and remote users. This includes centralized internet access management, easier connections between firewalls and SASE services, and better checks on user identity and device security to support Zero Trust. Through this offering, CHKP can help companies use AI safely, apply Zero Trust security rules, and protect networks that span offices, data centers, and the cloud.

Palo Alto Networks has partnered with IBM to launch a joint solution to help companies prepare for quantum-safe security. The joint solution combines IBM Consulting’s expertise in quantum-safe security with Palo Alto Networks’ network security platform. Together, they aim to give customers a clear view of how encryption is used across their hybrid environments, including on-premise systems, cloud, and networks.

Conclusion: Hold Allot Stock Right Now

Allot is seeing strong growth in its SECaaS business, which is driving higher revenues, rising recurring income and better earnings visibility. Rising customer interest in newer cybersecurity offerings, such as OffNetSecure, creates opportunities to sell more services to existing customers, which bodes well for the company's prospects.

Stiff competition from well-established legacy players, such as Check Point Software, Fortinet and Palo Alto Networks, remains a concern.

Allot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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