Verisec: Progress Ensues

Research Update

2015-11-26

15:20

Verisec reported revenues of SEK 17.8 million and thus fulfilled our revenue estimate of SEK 18 million in Q3. Reported EBIT was SEK -2.2 million versus our estimate of SEK -1 million, driven primarily by lower gross margins due to increased partnership sales in the revenue mix. Continued progress is being made with BBVA in implementing its Freja ID solution throughout the US and other countries for both retail and corporate customers. The progress will likely result in improved financial performance during 2016 which are largely discounted in our intrinsic value. The competition is intense and the company must be able to swiftly adapt to its changing competitive environment. Our DCF value of the company is maintained at 50 SEK per share in our base case, while our bear and bull case scenarios indicate SEK 30 and SEK 85, respectively. The BBVA progress is important, but does not change the investment case on its own.

PS

Philip Skogby

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