For shareholders of Zix Corporation (ZIXI), 2021 has been a bit rocky. In fact, the stock has lost nearly 9% so far this year, out of sync with the market, which has instead grown by over 11%. Nonetheless, the company has several catalysts that could boost its share price in the coming months.
Based in Dallas, Texas, Zix Corporation is an infrastructure software company that focuses on the protection of business communications. Serving customers across the globe, Zix offers encryption solutions for email and prevention solutions for data loss. Zix’s customer base includes governmental entities and healthcare, finance, and insurance operators.
2020 Earnings Report
The company saw its profitability progress well last year, as its adjusted EBITDA margin increased by 17%.
For full year 2021, the company expects that total revenue will grow by 12-14%, to $244-248.8 million. Furthermore, it projects that its adjusted EBITDA will grow by 10% to $56 million. Therefore, the adjusted EBITDA margin should remain at 23%.
Valuation
Shares of Zix Corporation are currently changing hands for $7.87 apiece, with the price/sales ratio currently landing at 2.01.
Over the past 52 weeks, the share price has been fluctuating between a low of $4.91 and a high of $10.37, and it has a market capitalization of approximately $449 million. According to these metrics, this company seems to be an interesting investment opportunity.
Catalysts
Internet threats are constantly increasing: every year, millions of webpages are infected with malicious software, and vast numbers of emails are embedded with dangerous attachments. These cyberattacks can lead to the shutdown of an entire enterprise’s infrastructure and can cause the permanent loss of crucial data. Companies that fall into the net of cybercriminals usually have to spend an inordinate amount of time and money to recover from these attacks.
Zix has recently integrated a multi-solutions platform with a cloud back-up and recovery that will protect its customers from ransomware-type cyberattacks. The company is well positioned to make the most out of the countless opportunities that cybersecurity – the challenge of the century – will present along the way.
Wall Street’s Take
In the last three months, five analysts on Wall Street have rated the stock a Buy. Thus, the consensus rating for Zix Corporation is a Strong Buy. The average analyst price target of $11.60 implies a 47% upside potential.
TipRanks’ Smart Score
According to TipRanks’ Smart Score, which analyzes stocks based on eight factors extracted from our unique datasets, Zix has a Smart Score of 6, meaning it is expected to perform in line with the broader market. (See Zix stock analysis on TipRanks)
Summary
Cybersecurity is the challenge of the century, with an increasing number of companies worldwide targeted by cybercriminals. Cyberattacks can cause serious damage, including the complete and permanent collapse of an enterprise’s infrastructure.
Preventing the loss of data is a highly profitable space that is expanding with the growth of the internet. Zix Corporation, with its multi-solutions platform, is strongly positioned and its stock is trading inexpensively.
Disclosure: On the date of publication, the author did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.