IPOs To Watch: Amazon, Microsoft Partner Telos Tries To Secure Breakout

While providing cybersecurity solutions for the world’s most security-conscious organizations, 2020 IPO stock Telos (TLS) aims to lock down a breakout from its first base. After finding support, TLS stock is up around 7% Wednesday in relatively light volume.




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Based in Virginia, Telos helps secure the networks handling sensitive data and communications for the federal government, the U.S. Department of Defense (DoD), intelligence and civilian agencies, and NATO allies and other organizations around the world.

As a leader in cybersecurity, Telos has partnerships with Palo Alto Networks (PANW) and major cloud computing companies such as Amazon.com (AMZN) and Microsoft (MSFT).

In addition to collaborations with Amazon Web Services (AWS) and Microsoft Azure, software security firm Zscaler (ZS) has also just partnered with Telos.

Zscaler has selected Telos’ Xacta to enhance its enterprise cyber risk management framework. Delivering security awareness for systems in the cloud, on-premises, in hybrid and multi-cloud environments, Xacta will help Zscaler with the management and automation of FedRAMP and Department of Defense (DoD) authorizations.

FedRAMP, which stands for the Federal Risk and Authorization Management Program, provides a standardized approach to cloud-based security authorizations.

As part of its Secure Communications business, Telos also offers Telos ID, which fuses use biometrics, credentials, and other identity-centric data to continuously monitor trust.


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Telos Among Top IPOs To Watch

Although not on IPO Leaders, Telos, which went public in November, is worth keeping an eye on. From the end of its first week on the market, TLS stock more than doubled in just two months.

After rising 106%, Telos ran into resistance in late January and pulled back below its 10-week moving average. The young cybersecurity stock is now forming a new chart pattern and has earned a spot on the IBD Breakout Stocks Index.

Partner and fellow security software stock Zscaler is also among the top IPOs to watch as it tries to regroup after a sharp run following the coronavirus crash. Cloud services giants AMZN and MSFT are also consolidating.

In a sign of institutional sponsorship, 40 leading mutual funds with an A rating from IBD have a position in Telos.

While still trying to shore up its fundamentals, Telos has flashed signs of potentially promising earnings growth. Based on estimates compared to prior-year quarters that showed a loss, Telos has posted triple-digit EPS growth in two of the last three quarters. No annual earnings estimates have yet been established for 2021.

Telos’ sales fell 3% vs. a year ago to $44.9 million in the fourth quarter of 2020. This follows top-line gains of 31%, 29%, 25%, 35% and 4% in the prior five quarters.

As we wait to see if AMZN and MSFT stock can complete their current bases and Zscaler tries to find its footing, see if Telos can find support for a breakout past a potential 41.94 buy point.

In a sign of support, TLS stock has retaken its 50-day line and is up around 7% Wednesday. Volume is trending below average, so look for heavier buying to kick in as Telos tries break out.

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