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A Look At Mitek: 3 Bullish Developments Into Q3 Earnings

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A Look At Mitek: 3 Bullish Developments Into Q3 Earnings
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After a difficult month of June, investors in Mitek Systems, Inc. (NASDAQ: MITK) may be looking to earnings later this week for some relief.

Mitek, a company that develops and sells mobile capture and identification software to businesses, was the target of a negative early-June report by StreetSweeper, a well-known short seller. Mitek shares subsequently fell 15 percent on the report, which highlighted weak IP assets, increased competition and a large price-to-earnings ratio.

Mitek CFO Russell Clark subsequently spoke with Benzinga, and refuted many points made in the StreetSweeper article. Clark said the company's "business continues to do well." This confidence was echoed by Roth Capital, which released a note that said the short report "pullback creates buying opportunity."

3 Bullish Developments Heading Into Earnings

  • Sources familiar with Mitek say they have entered into nationwide agreement with a large pharmaceutical retail chain.
  • Sources familiar with Mitek say Mobile Verify business is now doing over half a million mobile verifications per month.
  • Recent IP win against Rothschild Mobile Imaging Innovations over four patents.

When asked about the state of Mitek moving forward, William Blair's Bhavan Suri told Benzinga that Mitek's cloud business is expanding rapidly and could become 50 percent of revenue in the next 2-3 years.

Combined the mobile ID growth with the removal of the Rothschild legal overhang, Thursday's earnings seem encouraging. Mitek shares are still down from the $9.10 level prior to  StreetSweeper's June 2 report, but July has been a bounce-back month. Shares were up 2.5 percent at $8.04 in Monday's session.

Benzinga made several attempts to contact Mitek, but the company has not responded.

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