Nanotech Security (Nanotech Security Stock Quote, Chart, News: TSXV:NTS) offers a better and more secure solution in multiple market segments that together are worth billions of dollars per year, says Cantor Fitzgerald Canada analyst Ralph Garcea.
This morning, Garcea initiated coverage of Nanotech with a “Buy” rating and a one-year price target of $2.50, implying a return of 110 per cent at the time of publication.
Nanotech, notes Garcea, offers security that is based on nanotechnology and optical thin film. The solution is used in anti-counterfeiting and brand authentication in products such as banknotes and passports. The company’s nanotechnology platform, KolourOptik, says the analyst, replaces hologram technology that dates back to the 1960s.
“The nano-optic security features, called KolourOptik, employ arrays of hundreds of millions or billions of nano-holes that are impressed or embossed onto a substrate material such as polymer, paper, metal, or fabric,” says Garcea. “By using sophisticated algorithms to direct an electron beam, the company is able to create arrays of unique light signatures (visual images). These nano-hole structures create colour shifting effects that provide visual features such as 3D, high-definition and motion-impression, and can also display distinct colours including skin tones, white’s and black’s, effects that are not possible using current holographic technology.
Garcea notes that Nanotech has already created solutions for the consumer electronics, brand identification and currency segments. He points out that one of the company’s biggest differentiators is that its solution can be embedded onto almost any material. This is important, he says, because it means that security can be embedded into places it previously could not go, such as directly onto a pharmaceutical pill.
Garcea says Nanotech could face potential competition from the likes of domestic or foreign governments and could be wedged out by competitors who currently benefit from subsidies or protective measures in their respective jurisdictions. But the analyst points out that the company has a strong base of intellectual property, with current patents and patent applications covering colour shifting OTF and nanotechnology. He notes that the company has spent $12-million, to date, developing its IP.
Shares of Nanotech Security closed today up 2.5 per cent to $1.22.