NetScout stock initiated with Buy rating at B.Riley on AI growth potential

Investing.com - NetScout (NASDAQ:NTCT), currently trading at $23.14 with an impressive 78.7% gross profit margin, received a Buy rating initiation from B.Riley on Tuesday, with analyst Erik Suppiger setting a $33.00 price target for the network services technology provider. InvestingPro analysis suggests the stock is currently undervalued.

The firm views NetScout as strategically positioned to benefit from artificial intelligence emergence in both its network monitoring and network security markets, citing the company’s proprietary technology as a key advantage. With a strong financial health score and more cash than debt on its balance sheet, the company appears well-positioned to execute its AI strategy. Discover more insights about NTCT and 1,400+ other stocks with InvestingPro’s comprehensive research reports.

B.Riley highlighted that data generated by NetScout’s network monitoring solutions is becoming increasingly valuable for observability tools and AI operations, potentially allowing the company to expand its user base and create new partnership opportunities.

In cybersecurity, the firm noted that threat actors creating distributed denial-of-service (DDoS) attacks are leveraging AI for more sophisticated attacks, increasing demand for NetScout’s DDoS protection solutions.

The research firm also pointed to NetScout’s strong profitability, cash generation capabilities, and substantial cash reserves, suggesting that the stock’s recent underperformance compared to other cybersecurity stocks since July represents a buying opportunity.

In other recent news, NetScout Systems Inc. reported its Q1 FY2026 earnings, exceeding earnings per share (EPS) expectations. The company posted an EPS of $0.34, beating the forecasted $0.32, which represents a 6.25% surprise. However, revenue slightly missed expectations, coming in at $186.75 million compared to the anticipated $187.23 million. While the earnings results were mixed, the company managed to surpass the EPS forecast, a key metric for investors. The revenue shortfall was minimal, indicating stable performance in the quarter. These developments are part of the company’s ongoing financial updates.

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