American technology giant Cisco Systems, Inc. (CSCO) announced its intent to buy Israel-based Epsagon, an application monitoring company, to accelerate its full-stack observability strategy.
Epsagon helps companies save development time and money while helping their Dev and Ops teams identify and fix issues faster and focus on their core operations of building new services and apps for their business. (See Cisco stock charts on TipRanks)
While the financial terms of the deal were not disclosed, a report on Globes states that Cisco will be paying $500 million for the deal.
Upon completion of the deal, the Epsagon team will be joining Cisco’s Strategy, Incubation, and Applications group.
With more apps coming into the market daily, increasing consumer demand for a smooth digital experience heightens the need for companies to innovate swiftly. Cisco mentioned that to satiate this need, businesses are adopting cloud-native technologies, microservices, and containerized components on a large scale, while leveraging an extensive web of traditional components, third-party services, and application programming interfaces.
As a result, multiple teams are deployed in the performance monitoring, optimization, and security of every application. While traditional domain-centric monitoring tools are unable to meet the complexity of such needs, Cisco’s full-stack observability strategy enables customers to deliver exceptional digital experiences optimized for cost, security, and performance and maximize digital business revenue.
Commenting on the deal, Cisco’s Chief Strategy Officer and GM, Applications, Liz Centoni, said, “Epsagon’s technology and talent align well with Cisco’s vision to enable enterprises to deliver unmatched application experiences through industry-leading solutions with deep business context. By contextualizing and correlating visibility and insights across the full stack, teams can improve collaboration to better understand their systems, solve issues quickly, optimize and secure application experiences and delight their customers.”
Recently, after undertaking Cisco’s F4Q’21 Partner Survey, Robert W. Baird analyst Jonathan Ruykhaver maintained a Hold rating on the stock with a price target of $53, implying 6.1% downside potential to current levels.
Cisco is scheduled to report its Q4 FY2021 results on August 18. Overall, the analyst is disappointed with the weaker response rates for the fourth quarter, compared to the prior two quarters. However, Ruykhaver noted that Cisco’s business seems to be reaching above its COVID-19 impacted levels, which is a good sign.
Furthermore, the analyst said, “While difficult to assess exactly how partner feedback around supply chain constraints will translate into reported results for CSCO, it is clear partners are seeing pressure around their ability to get the product, something to keep in mind going forward.”
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 8 Buys and 5 Holds. The average Cisco price target of $54.58 implies 3.4% downside potential to current levels. Shares have gained 34.2% over the past year.
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