Analyst: OneSpan Earnings A 'Step In The Right Direction"

Onespan Inc OSPN reported second-quarter results, which showed the e-signature and secure transaction company is processing in transitioning toward a software security player, according to Wedbush.

The Analyst

Wedbush's Daniel Ives maintains a Neutral rating on OneSpan's stock with a $17 price target.

The Thesis

OneSpan's second quarter was mostly inline with expectations and marks a turnaround after hitting a "speed bump" in the first quarter, Ives wrote in a note. Encouragingly, management maintained its fiscal 2019 guidance which marks a "step in the right direction."

Onespan continues to evolve away from a financial services hardware provider highlighted by a limited total addressable market. Instead, the company hopes to evolve to become a modern software security focused company with authentication and fraud prevention solutions.

Ives said the evolution addresses a fundamental need from global financial institutions to move their identity security infrastructure into a cloud based environment. Onespan has spent heavily to address this need and it can even offer cross-selling opportunities, especially on the mobile security front.

OneSpan's fundamental opportunities look to be "relatively healthy" and the company has a path to achieve growth, but ongoing concerns related to its transition on the software and hardware side remain and investors may want to consider waiting on the sidelines.

Price Action

Shares of Onespan were trading lower by 5.6% Friday at $14.97.

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