This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

TechWeek: Internet Security Leak

A couple of slaps administered by the sell-side took a bit more steam out of Internet Security Systems (ISSX) this week, and the stock's bullish run has slowed to a walk.

Since the network security provider reported third-quarter earnings in late October, its shares have traded in near tandem with the Nasdaq, gaining just 7%. Compare that with the spring and summer, when its stock jumped 45% between mid-April and mid-September, outperforming the index by a factor of three.

The flattening curve is no mystery. Investors are wondering if most of the good news this company will deliver for a while is already priced in. Jefferies analyst Katherine Egbert, for example, downgraded the stock to hold this week, saying, "We think that current consensus for another year of 14% top-line growth in 2006 reflects an unrealistic level of optimism."

Moreover, Egbert and others say that Check Point Software Technologies (CHKP - Get Report), ISS's larger rival, could become significantly more competitive as it enters ISS' core intrusion prevention business via the $225 million acquisition of Sourcefire.

"CheckPoint is a formidable competitor and one ISS has not had to deal with head on,' says Gartner analyst Amrit Williams. But CheckPoint, he adds, will have to prove it can integrate Sourcefire's open-source technology into its more conventional business model.

Also expanding efforts in enterprise security are Computer Associates (CA - Get Report), Juniper Networks (JNPR - Get Report)and Cisco Systems (CSCO - Get Report)

ISS made a name for itself in the first part of the decade, becoming a leader in the market for intrusion detection technology to alert techies that their corporate networks were under attack. But by 2003, the market flattened and the company changed course, moving from software-based detection products to appliance-based intrusion detection systems, or IPS.

The company's technology gets high marks from analysts, and leads the pack with an approximate 28% share of the nearly $500 million market for intrusion prevention and detection, according to market research firm IDC. And driven by the need to comply with increasingly stringent government and industry regulation, the market will reach $879.3 million in 2006, IDC predicts.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs