Mitek Systems (MITK) PT Lowered to $11 at H.C. Wainwright

H.C. Wainwright analyst Scott Buck lowered the price target on Mitek Systems (NASDAQ: MITK) to $11.00 (from $19.00) while maintaining a Buy rating.

The analyst commented: "Shares of Mitek Systems, Inc declined 25.4% in Friday trading versus a 0.2% decrease in the Russell 2000 following disappointing financial guidance communicated with F3Q24 operating results. While F3Q24 revenue of $45.0M was just below our $47.0M estimate and $48.0M for the Street, the company meaningfully reduced its full year revenue guidance to $169.0M to $173.0M from $180.0M to $185.0M. The decline is driven by challenges within the company’s Identity segment, which saw multiple large deals pushed into 2025 or exit the pipeline entirely. As a result, the segment is no longer expected to reach breakeven in F4Q24, and is, in our view, unlikely to reach quarterly profitability in FY25, weighing on consolidated operating income and EBITDA margins. Following Friday’s trading activity, we believe the market is sending a clear message that it sees no value in the identity business. Given the company has invested hundreds of millions of dollars organically and through M&A, we believe the potential sale of this asset could unlock meaningful value for shareholders near term, which we view as preferential to spending the next several years trying to scale the business organically. Making the company’s situation more challenging, the business remains without a permanent CEO. A positive is that the company has been utilizing its share repurchase program, buying $16.0M of company shares since the program was instituted earlier this year. With the decline in shares, we expect Mitek to continue to be a buyer of its own stock providing some downside protection. Given lack of visibility around the identity segment and lower expectations for FY24 and FY25, we have reduced our price target on MITK shares to $11 from $19. We remain Buy-rated."

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