On Monday, Rosenblatt has increased its price target for OneSpan Inc. (NASDAQ: NASDAQ:OSPN) shares, lifting it to $22.00 from the previous $22.00. The firm has maintained a Buy rating on the stock, citing the company's robust performance and strategic shift towards subscription services.
OneSpan's transition to a subscription-based model has been well-received, as evidenced by the growing demand for digital agreements. This shift is a critical component of Rosenblatt's positive outlook. The firm has made minor adjustments to its forecasts to account for these developments.
The revised fiscal year 2024 revenue prediction now shows an increase of 2.5%, up from the earlier estimate of 2.3%. Moreover, subscription services are expected to contribute 58% to the total revenue, a slight increase from the previous forecast of 57%.
The new price target is based on updated valuation multiples, with the enterprise value to calendar year 2025 estimated sales (EV/CY25e Sales) ratio now at 3.2 times, up from the previous 2.6 times. Similarly, the enterprise value to calendar year 2025 estimated EBITDA (EV/CY25e EBITDA) multiple has been raised to 11 times from 9.6 times. This adjustment reflects OneSpan's consistent execution over the past four quarters.
OneSpan's stock is currently trading at a discount compared to its peers, which are valued at an average of 3.9 times EV/CY25e Sales and 15.4 times EV/CY25e EBITDA. Rosenblatt's analysis suggests that the company's stock has room for growth, given its strong execution and favorable shift towards a subscription-based revenue model.
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