Cisco Systems (CSCO) has announced its intent to acquire privately held ThousandEyes, Inc. for a reported sum of close to $1B, in a deal that is expected to close before the end of Cisco’s Q1 FY’21.
San Francisco-based ThousandEyes is a SaaS-based NPM vendor focused on diagnosing performance issues with applications and underlying network infrastructure (cloud, enterprise, and Internet) using synthetic and user experience monitoring methods. Notably, the company recently announced that its customer contractual commitments surpassed $100M in FY20, growing almost 80% year-over-year.
Cisco will incorporate ThousandEyes’ capabilities across Cisco’s core Enterprise Networking and Cloud, and AppDynamics portfolios.
“The combination of Cisco and ThousandEyes will enable deeper and broader visibility to pin-point deficiencies and improve the network and application performance across all networks” cheered Todd Nightingale of Cisco Enterprise Networking and Cloud.
Oppenheimer’s Ittai Kidron remarked that he is ‘positive on the acquistion’ and reiterated his CSCO buy rating on May 28, writing “We see a strong synergetic opportunity for Cisco and believe ThousandEyes’ global network could be bundled with and enhance the value proposition of AppDynamics (bundle NPM/APM), SDWAN/branch portfolio (improve route performance/visibility), and ISR router portfolio (extend visibility reach).”
The analyst believes ThousandEyes can also add automation capabilities using AI and machine learning longer-term to further reduce customer OpEx.
Overall, CSCO scores a cautiously optimistic Moderate Buy analyst consensus, with 11 recent buy ratings offset by 10 hold ratings. Meanwhile the average analyst price target of $47 indicates 4% upside potential lies ahead. Shares are currently trading down 5% year-to-date. (See Cisco stock analysis on TipRanks).
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