This week in biometrics industry stocks

June 16, 2017 - 

As the biometrics industry continues to grow and expand Biometric Update is bringing a new focus to some of the stock stories in the sector. Check in with this space each week for a rundown of some of the financial news emerging out of the group of biometrics industry stocks we like to follow.

-Well-known financial news site theStreet.com mentioned the firm, Next Biometrics in a story that looked at stocks that jump in “value on news of terrorist attacks.” The story was based on a report from an insurance company that found, “Incidents of terrorism in western countries increased 174% in 2016…” Although, “individual acts of terrorism don’t generally move the stock market for long,” some industries do well after attacks according to the story. Citing an analysis done by CNBC companies like computer security firms and defence equipment suppliers do well as governments may see, “… increased sales as leaders increase spending on military supplies.” According to the story, “Surveillance companies such as Overprint Systems, a New York-based software analysis firm that enables law enforcement agencies to conduct mass surveillance, are also poised to gain. Similarly, countries may up their purchases of biometrics equipment, which may prove to be a boon for companies such as Next Biometrics, which provides fingerprint sensor technology, and Ana logic, a large manufacturer of airport X-rays.” Interesting.

-An industry blog notes that Apple supplier Garland Precision told analysts “during an earnings call that they were worried whether the company had enough staff to handle Apple’s new3-D sensing image camera for the iPhone 8.” Not good. As an Apple supplier the CEO shouldn’t muse aloud about possible slowdowns. The company’s chief executive in a press conference after the company’s annual general meeting clearly stated that ‘We will have lenses for 3-D sensing module used in smartphone ready to ship in the second half this year’.” The company could supply 90% of rear camera lenses for iPhones, around 50% of 3-D sensing lenses, and up to 30% of the front camera lenses, next year according to trade industry reports.

-Also in the global investment industry media this week, a piece in the venerable investment industry magazine Barron’s, finds a columnist claiming Diebold shares could gain over 25 percent from the acquisition of Wincor Nixdorf. According to the columnist the “… two cash dispensing machines makers [are] expected to produce heftier profits.” The details are well-known: Last year, “Diebold bought its German rival Wincor Nixdorf for 1.7 billion euros ($1.9 billion), creating the world’s biggest provider of automated teller machines (ATMs). The company is expected to increase its revenue 2 percent annually through 2020 and raise its earnings per share to $3 or more via $200 million in cost reductions and other benefits from the merger,” according to Barron’s columnist Vito Racanelli. He predicted Diebold’s share price could rise, “… 25 percent to 40 percent in the next couple of years to $33 to $38, compared with Friday’s close of $26.80…,” according to the report.

-NXT-ID announced wholly-owned subsidiary Fit Inc.–provider of payment, credential management, and authentication platform service–was able to announce last week that its Token Service Provider (TSP) has been successfully integrated with, “Visa Token Service.” This means Fit Pay is now qualified as a Visa TR-TSP provider and allows Fit Pay to move forward with the, “…implementation of its payment enablement platform for Internet of Things (IoT) and wearable devices.” According to the press release the Visa Ready Program provides “standards to allow partners to quickly introduce Visa-approved devices, software, and solutions that can initiate or accept Visa payments.” The platform uses tokenization, a payment security technology that “replaces cardholders’ account information with a unique digital identifier (a ‘token’) to transact highly secure contactless payment and authentication services.” By using tokens the device doesn’t need to be connected to the Internet to transact payments. “As one of the first partners to have our solution approved by Visa, Fit Pay takes a leadership role in enabling secure payment capabilities across a wide range of new devices and form factors… Successfully integrating with Visa, the largest card network in the world, is a major step forward in our effort to bring contact-less payment capabilities to a whole new generation of devices,” said Michael Orlando, President of Fit Pay, Inc. and COO of NXT-ID. The announcement helped the stock.

-Fingerprint Cards’ CEO Christian Fredrikson discussed his company’s recent acquisition, Delta ID, in a conference call. According to a transcript, “It’s a great day for us. Biometrics is going multi-modal and Fingerprint Cards is driving that development.” Fredrikson went on to say that multi-modal approaches on smartphones are trending within that the industry. “… it is only stronger than it was six months ago, and stronger, clearly stronger than it was nine months ago… So, I feel like this has been the great choice and the right choice for us as a company… We have many modalities and we feel that fingerprint and iris are the strongest and the best choices…fingerprint and iris are complimentary modalities. They will add extra layer of security… Fingerprints and iris both provide high security and usability, and we’re now the only one in the world who has the capability to find and provide both in a combined offering… With that capacity in our hands… we want to be the market leader in fingerprints, in iris, in the multi-modal market overall, as [well as] security within the biometric space. We have of course strengthened our fingerprint cost leadership in the biometric technology market,” according to Fredrikson.

-After the CEO the CTO, Pontus Jägemalm, had some words. “[We now] have an additional strong software-based offering… We also have for the first time the cloud offering, which is now in use for example by NEC the licensing as well as we have a U.S. government projects on board.”

-Jan Johannesson, the vp of strategic planning and portfolio management, said, “[To] talk a little bit on the markets, it is clear now that we see there is a growing need for multi-modal communications and specifically we have seen it’s already implemented in India with Aadhaar. [see below]… We see there is ongoing discussions for similar systems and that is one of the primary drivers for iris implementations, clearly for us, we want to make sure that we continue to serve our customers in the mobile, automotive, IoT and PC space and where the main opportunity lies in mobile. And even though the market is coming from rather small numbers today, we do have a couple of products out in the market both from Delta ID as well as from other suppliers. It is clear that the growth potential is certainly here, and from strategy analytics, we have an indication and estimate that the markets for iris scanning is going to grow almost to 500 million units in the next five years, which I think resembles a lot about the predictions we have for fingerprint sensing products a couple of years ago. I mentioned Aadhaar before and for just as a reminder, this is the by far the largest and most developed biometric system deployed today in the world. It has more than 1 billion Indian residents enrolled into the systems, and there are millions of authentications done per day, and typically is used in everyday world for food subsidy disbursement, bank account verification and so on. Even if you want to have a SIM card activated, you use that. In India’s market, Delta ID has been very successful in launching products and one true evidence of that is a Samsung Galaxy Tab iris product, which is certified for Aadhaar use and integrates the software… And also the very important fact is that, Delta ID is offering a certified reference this time, which we are very happy to have now in house. And that in combination with our ongoing discussions throughout our customer portfolio, this is a very strong foothold coming into the market [in India].”

-The Aadhaar ID program is an epic event. It is, according to media reports, the “biggest biometric program in the world.” The Supreme Court of India recently ruled that, “Starting next month, an Aadhaar ID will have to be listed along with tax returns…” The top court allowed the linking of tax returns to Aadhaar- a unique 12-digit ID assigned to every citizen and linked to iris scans and fingerprints- is essential to check tax evasion. “Our stand is vindicated,” said Attorney General Mukul Rohatgi. “Nearly 1.1 billion Indians have an Aadhaar ID. “Judges today said that what they have upheld is the constitutionality of the new law. A separate case is deciding on whether making Aadhaar mandatory for tax returns and other processes violates a citizen’s right to privacy,” The writer goes onto say that, “The law passed earlier this year makes it compulsory starting July for the quoting of an Aadhaar number when filing returns as well as when applying for a Permanent Account Number or PAN card, which is a tax code given to each individual. Judges today said that those already assigned an Aadhaar ID must use it for their returns and link it to their PAN card; others can proceed without it… PAN allows for the tracking of all related monetary information of that entity. Quoting or producing a copy of your PAN card is compulsory in practically every major financial transaction including the purchase or sale of property, and is not restricted to Income Tax dealings.” The Finance Minister argued that while people can use multiple PAN cards for tax evasion, Aadhaar, because of its biometrics, is harder to misuse… Almost overnight the Aadhaar system creates the “world’s largest database of biometrics.”

-As biometrics tech move into the mainstream those in the sector need to be wary of how cultural attitudes around these technologies are going to form and firm up. An interesting editorial appeared in Forbes magazine this past week. Ron Eliot Dichter, identified as the CEO of Blue Dog Business Services, wrote an editorial in which he complained that biometric ID demands are becoming onerous. As Dichter puts it: “… Increasingly, this is not simply our Social Security numbers and mother’s maiden names, but it’s the unique biological bits and pieces that make us us. We unlock our phones and other devices with our fingerprints, even though this may be our phone’s biggest vulnerability…ERGO wants to use your ear, and Apple is doing what Microsoft has done with some of their Windows-based handsets…making you use your face to log in… At virtually every major airport we are asked to step into a machine that could easily be mistaken for a cloning device and stand with our arms and legs outstretched allowing a TSA agent to snap impossibly creepy, if not compromising, pictures of us.” The rant winds up complaining about biometrics on credit cards. “The gist of this card is to seamlessly integrate existing technology that merchants may have in place today with the advancements in the biometrics world, allowing for more security and a better shopping experience for customers. [It]… makes me feel uncomfortable on a visceral level, though I don’t think I can explain why,” he says.

Contact us for the full list of the companies we are following or to suggest a company to follow.

Disclaimer: Stock recommendations and comments presented on BiometricUpdate.com are solely those of the analysts and experts quoted. They do not represent the opinions of BiometricUpdate.com on whether to buy, sell or hold shares of a particular stock. Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert’s stock analysis or opinion. All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation.

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About Jeff Sanford

Jeff Sanford has worked as a business journalist for more than fifteen years. He has held staff jobs at major commercial publications such as Canadian Business and National Post Business magazine. He has contributed to various Canadian, U.S. and UK-based publications. He has written about markets, economy, finance, energy, infrastructure, government policy and technology. He currently lives and works in the west-end Toronto neighbourhood of Parkdale.