BOSTON, Feb. 12, 2019 /PRNewswire/ -- SoundView
Technology Group (http://soundview.co) releases the following
company update for NXT-ID, Inc. (NASDAQ:NXTD).
Nxt-ID (NXTD $1.18)
The full report can be read at:
http://s3.amazonaws.com/PUBLISHED/NXT-ID_NXTD_SV_Note_FEB_2019.pdf
Highlights/Excerpts
Transitioning into 2019
Shares in NXTD were down sharply in Q4 of 2018, along with most
stocks in the market. However, they were also hurt by the delay of
their proposed spinoff of "PartX" to existing shareholders. One
thing we got in the delay was a clear market signal about how much
people feel that PartX would be worth as a separate company. When
combined with the existing Logic Mark business it suggests the
shares continue to trade at a discount.
As shown in our FPV model our current estimate for where shares
of NXTD should trade is $3.69 versus
the current $1.20. The market
suggested a value for PartX at $15M
based on the price action of NXTD trading with and without the
spinoff last year. And since that time PartX has announced a new
customer, Swatch, continued to expand their relationship with
Garmin and will be shipping the Flip in Q1.
It was also announced that Discover is now live on the FitPay
Platform. That brings the FitPay ecosystem to 15 devices from two
leading brands, four large-scale payment networks (Visa,
MasterCard, Discover and Maestro), and more than 275 banks/payment
cards in 35 countries.
Let's do some simple back-of-the-envelope valuation on NXTD.
We'll give PartX a bump from the last market-based estimate of
$15M and say they will be at least
$20M when they spin off in
2019. That will leave NXTD with the core Logic Mark (LM)
business which has been a steady growth, high-margin business since
they acquired it.
Our point estimate for LM revenues is $22M. This business generates 70%+ gross margins
and is solidly profitable. While initial operating margins in 2019
might be closer to 10%, but this is a 20%+ operating margin
business.
What value do we put on a $22M
business growing 10-15% YoY with 10-20% operating margins? A solid
starting point is 15x on 15% operating margins = $22M x 15% x 15 or $50M.
And that's not factoring in any incremental success from new LM
initiatives – especially the combination of their new Notifi911
consumer offering with expanded distribution at retailers like Best
Buy. There are expanding opportunities for wearable solutions like
Notifi911 in healthcare, employee safety and making emergency
response more effective and efficient.
That provides what we'd call a "base" valuation case of at least
$70M and that's not factoring in the
potential for real growth in 2020. That would translate into a
current share price of $2.20.
If we include simple trendline growth for the next year we get to
$85-90M
for the combined company or about $3.00/share.
Stock Conclusion
The stock action late in 2018 and into 2019 puts a market-driven
valuation on PartX which should be even higher in early 2019 based
on the additional progress they have announced.
Logic Mark is a positive "known quantity" that we can value on
the fundamentals. Current stock levels should be between
$2.20 and $3.00/share in the next six to 12 months.
ABOUT SOUNDVIEW RESEARCH
SoundView conducts independent research – mostly on emerging
technologies. We like thematic-driven companies where technology is
involved and use analysis to identify the most promising investment
opportunities.
Our business model is combination of subscription fees along
with some direct investments and advisory fees. We measure our
success by the quality of our analysis, accuracy of the conclusions
and the size and influence of our audience. We apply our own proven
approach to valuation that we call intrinsic value (IV) for
informing investment decisions and optimizing portfolio
management.
Disclosures
SoundView serves as a strategic advisor to Nxt-ID and provides
advisory and other services including strategy advice, company
positioning, investor communication methods and ongoing technology
and market research. See our full page of practices and disclosures
which should be attached to this report. If not, it is available at
http://soundview.co/practices
Contact:
Kris Tuttle
SoundView Technology Group
kris@soundview.co
+1-617-828-6462
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SOURCE SoundView Technology Group