WISeKey stock maintains Buy rating from H.C. Wainwright

H.C. Wainwright has maintained its Buy rating and $4.00 price target for WISeKey International (NASDAQ: WKEY), despite a significant year-over-year decline in the company's first-half 2024 revenues.

WISeKey, a cybersecurity company specializing in Internet device security, reported a 66% decrease in revenue to $5.2 million for the first half of 2024, down from $15.1 million in the same period the previous year.

The results, which were announced late Monday and discussed in a call on Tuesday, fell short of the analyst firm's initial expectations of $10.0 million.

The company attributes the revenue shortfall to an expected downturn in semiconductor sales through its spinoff, SEALSQ Corp.

The need for more sophisticated cryptographic protection due to the advent of quantum computing is anticipated to create a $500 million annual market opportunity for WISeKey. However, the impact of this technological shift has already been reflected in the company's 1H24 performance, prompting a revision of financial estimates.

WISeKey's other strategic projects, including the WISeSat satellite constellation and SEALCOIN, a tokenization initiative for peer-to-peer payments within the Internet of Things (IoT) environment, are progressing.

The launch of the 18th satellite for WISeSat has been delayed to early next year due to SpaceX scheduling, which is beyond WISeKey's control. SEALCOIN, which builds upon a previous project with Mercedes-Benz (OTC:MBGAF) Group, is expected to commence scale proof-of-concept trials later this year, with a full launch planned for the following year.

In other recent news, WISeKey International Holding Ltd, a global cybersecurity and IoT company, has received a notable $50 million token investment commitment from GEM Digital Limited.

This investment is directed towards the development of WISeKey's SEALCOIN AG project, which aims to revolutionize the Internet of Things (IoT) landscape by enabling autonomous transactions and service exchanges among IoT devices. The funds will specifically enhance the platform's capabilities for scalable, efficient IoT transaction solutions, promoting SEALCOIN as a global Machine-to-Machine token.

In addition to the financial support, WISeKey has also entered into an agreement with The Hashgraph Group (THG), which will provide engineering expertise and strategic guidance in the Web3 economy.

The SEALCOIN platform, currently in development, is anticipated to launch in Q4 of this year, offering potential applications across various sectors. This includes smart home automation, supply chain management, autonomous vehicles, smart cities, healthcare devices, energy trading, industrial IoT, retail and consumer services, agricultural technology, and peer-to-peer transactions.

InvestingPro Insights

Recent InvestingPro data provides additional context to WISeKey's financial situation. The company's market capitalization stands at $15.03 million, with a price-to-book ratio of 0.39 as of the last twelve months ending Q2 2024. This low P/B ratio aligns with one of the InvestingPro Tips, which notes that WISeKey is "Trading at a low Price / Book multiple." This could suggest that the stock is undervalued relative to its assets, potentially supporting H.C. Wainwright's maintained Buy rating.

However, the data also reveals challenges faced by WISeKey. The company's revenue for the last twelve months ending Q2 2024 was $20.98 million, with a significant revenue decline of 25.27% over the same period. This decline is even more pronounced in the quarterly data, showing a 65.75% drop in Q2 2024 compared to the previous year, which aligns with the article's discussion of the 66% decrease in first-half 2024 revenues.

InvestingPro Tips also highlight that analysts anticipate a sales decline in the current year and expect the company not to be profitable this year. These insights corroborate the article's mention of revised financial estimates due to the downturn in semiconductor sales.

For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for WISeKey, providing a deeper understanding of the company's financial health and market position.

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