Absolute Software (TSX:ABT) has a corner on a lucrative market, says Industrial Alliance Securities analyst Blair Abernethy.
On Thursday, Abernethy launched coverage of Absolute Software with a “Buy” rating and one-year target price of $11.00, implying a return of 63 per cent at the time of publication.
Abernethy says he expects Absolute’s stock will recover this year on the back of new partnerships, improvements in sales, and an ongoing stock buyback.
“Absolute has a unique, patented SaaS product with a defensible competitive advantage of being embedded on the BIOS of major PC OEMs and on select Android-based devices,” says Abernethy. “Absolute DDS provides IT security specialists with increased visibility and control over their mobile devices and the associated enterprise data on these devices.”
Abernethy says security has become a priority for companies in a way that it hasn’t been before.
“Computer and data security spending is a key growth area in most IT budgets,” he says. “This is aided by the increasing number and cost of high-profile data breaches. We expect IT security spending to remain robust for the foreseeable future as threats are continuing to escalate. Absolute’s solution provides a robust additional layer of access and data control that complements many third-party security solutions.”
The analyst says the scope of Absolute’s target markets has increased significantly as it has begun to service the government, healthcare and financial services verticals. Abernethy says he sees each of these markets as two to three times as large as the company’s former core, the education vertical.