Monday, October 12, 2020

An International Equity holding: Radware Ltd. (RDWR, $24.69): “On the Way to Value Capture” by: Alex Malitas, AIM Student at Marquette University

 Radware Ltd. (RDWR, $24.69): “On the Way to Value Capture”

By: Alex Malitas, AIM Student at Marquette University

Disclosure: The AIM International Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Radware LTD. (NASDAQ: RDWR) develops and markets cybersecurity solutions for virtual, cloud, and software defined data centers 

• In the digital age, cybersecurity remains an essential aspect of the advancement of technology and society. Cybersecurity spending is expected to reach nearly $134 billion by 2022. 

• Radware has a well-diversified product portfolio to address many of the needs of its customers base. 

• Radware is on a path to create more shareholder value as IT security spending becomes even more present as COVID incentivized more digital and cloud interactions. 

Key points: 

Radware Ltd. provides cybersecurity and malware protection services to its clients. Radware’s best in class DDoS systems have been adopted and integrated into the four major cloud providers (Amazon, Google, Microsoft, and IBM). This position as a cybersecurity provider available for these platforms establishes their ability to integrate, cross sell, and deliver quality products. Radware also has an ongoing partnership with Cisco and other OEM’s which allows the use and sale of Radware packages with their products, increasing visibility of their offerings. 

The company also has positioned itself well to benefit from the continuing shift to cloud services and eventually edge computing systems. In a world that is extremely data intensive and as volume increases, there are inherent risks of threats to these systems. Radware’s product offerings address these concerns successfully. While there is the chance that Radware will lose out on some of its strategic partnerships, I view this as an unlikely event based on the success of their products to date. 


What has the stock done lately?

Since the stock was pitched in April of 2020, the stock has increased from a price of $21.63 to $24.69, well on its way to achieving the stated price target of $29.04. The company will likely benefit from the increased digital presence from COVID-19 and the stock price will reflect this. 

Past Year Performance

RDWR has increased by 5.11% over the past year. The company saw a significant decline during the peak of the COVID-19 market crash but has since recovered and moved higher than pre-pandemic levels. The stock is still undervalued when looking at the price target of $29.04 established on April 17, 2020. 

Source: FactSet

My Takeaway

Radware not only has the ability to benefit greatly from an increased online presence due to the COVID-19 pandemic and work from home trends, the company has also positioned itself strongly for cloud and edge dominance in the coming years. It is likely that the company will use these strengths to add shareholder value and achieve the desired price target in our investment timeline. 


Source: FactSet