This week in biometrics industry stocks
As the biometrics industry continues to grow Biometric Update is bringing a new focus to the stories around the stocks in the sector. Check in with this space each Friday for a rundown of the financial news and interesting ideas from the week that was.
-BIO-Key International is having a good spring and summer. The company announced this week it received orders from ten healthcare organizations for fingerprint readers. The orders come from hospitals, eye care centers, medical device manufacturers, medical labs and group practices. Regulatory shifts in the healthcare sector are driving the new business according to Mike DePasquale, chairman and CEO of BIO-key. “BIO-key is achieving particularly strong sales traction in healthcare, expanding beyond our initial success with large hospital customers. This growth is being driven by regulatory compliance and supported by the workplace convenience that fingerprint biometrics provide,” said DePasquale in a press release. It seems doctors like the ease of fingerprint-based biometric access. According to DePasquale, “We are finding that end users, such as nurses, physicians and administrators, genuinely appreciate the ease of one touch biometric authentication versus the frustration associated with other sign-in methods. Because professionals in highly regulated industries such as healthcare are required to use multifactor authentication dozens of times per day, BIO-key is emerging as ‘the’ ideal solution to meet this requirement while also enhancing workflow efficiency. Saving healthcare professionals precious minutes each day is good for patient care and the bottom line.”
BIO-Key also recently announced it had been selected by a global financial institution to deliver biometric authentication for a Windows-based system that is deployed worldwide. “Reflecting the growing base of interest in deploying fingerprint authentication within highly-regulated industries, BIO-key has received more bank enquiries about our solutions in the past twelve months than in all of the previous twelve years,” said DePasquale. “We believe this trend is being driven both by the escalating challenge of protecting online assets and the widespread familiarity of fingerprint authentication on smart phones and tablets.” The Windows-based fingerprint readers address the, “… ongoing battle with password fatigue… Password resets have become a deterrent and nuisance to the online experience,” according to the CEO.
BIO-Key was also recently selected by a global firearms manufacturer and Department of Defense (DoD) contractor to offer an authentication system for access to the company’s workstations and kiosk’s within manufacturing facilities. The story goes on to note that many highly-regulated industries are working to satisfy a new regulation coming into play in December known as NIST SP800-171. The new regulation will require multi-factor compliance guidelines for accessing unclassified government documents and applications online. The guidelines, “… impact all government contractors and subcontractors with an implementation deadline of December 31, 2017,” the COO of BIO-key, Barbara Rivera, was recently quoted as saying, “Government and other highly regulated industries are finding fingerprint biometric authentication to be the least invasive and most cost effective way to address the NIST SP800-171 multi-factor requirement… The biometric industry has shown more growth and promise over the past three years than the previous 30… biometric technology is no longer just a government solution.”
In response to the good news analysts at investment bank Maxim International initiated coverage of BIO-key on July 13th of this year. The company has a ‘buy’ recommendation on the stock and a price target of $5.50. According to the Maxim analyst BIO-key is positioned to “disrupt” the biometric authentication market. “We believe passwords are becoming obsolete and BIO-key’s biometric authentication is a compelling replacement. As computer hackers have become more sophisticated, passwords have become vulnerable and easily breached,” according to the analyst.
The report also mentions that BIO-key is on the cusp of exploiting the traditional padlock sector. According to the Maxim report, “We believe [BIO-key] biometric authentication technology can help drive innovation in the traditional padlock and bicycle lock industry… the business has lacked innovation for decades, and we argue the biometric lock will revolutionize the industry… [BIO-key] TouchLock is a fingerprint biometric padlock, which includes Bluetooth that allows the lock to be operated by smartphone. We argue this improves the speed of opening a lock and eliminates forgetting combinations or losing a key. While we believe the TouchLock will be priced at a premium to a traditional padlock, we believe the ease of use could lead to consumers replacing their older padlocks.”
The report also notes that the biometric market is “rapidly growing” and quotes numbers from market research firm Grand View Research, which predicts the global biometrics market will reach $59 billion by 2025 (up from $10 billion in 2015).
Maxim reiterated its ‘buy’ rating on BIO-key shares on July 19th, citing a recent deal in Australia that will see the company deliver biometric software and hardware to a government agency that operates nationwide.
Shares in BIO-key were trading just above $3.00 a share this week and on Friday, the company announced that its common stock has been approved for listing on the Nasdaq Capital Market, effective with the start of trading on Tuesday, July 25, 2017.
-Fingerprint Cards released an interim report for Q2 2017, which saw revenues of SEK 823.4 million (US$100 million) compared to SEK 1,666.1 M (US$202.2 M) in Q2 2016. “The second quarter of the year was impacted by the previous inventory build-up in the value chain and lower market share among a number of major customers,” explained CEO Christian Fredrikson, adding that “towards the end of the quarter, inventory levels in the value chain normalized as anticipated.” Some of the highlights of the quarter included the launch of 19 new mobile devices featuring FPC sensors, new important partnerships with both module suppliers and distributors, new projects and partnerships with Zwipe and Kona, product launches from Huawei and Microsoft, and the completion of the acquisition of Delta ID.
-The financial trade press reported this week that a couple of investors in Synaptics have increased their holdings of the stock. According to the report Lombardia Capital increased, “… its stake by 44.9%…” The numbers come from regulatory filings submitted to the Securities Exchange Commission (SEC). According to the report Lombardia Capital bought up an additional 47,090 shares (for about $2.5 million), adding to its existing stake of 104,872 shares. Lombardia Capital is clearly bullish on Synaptics.
-On the product front SmartMetric announced it has succeeded in manufacturing a credit and debit card that has a fingerprint reader built right into the card. According to a press release the device, “… is the thickness of a standard credit card… [and] uses a persons fingerprint to unlock the card for use. Without a fingerprint match the card is locked down and unable to work.” The card sports a built-in rechargeable power source. “We have spent over a decade in research and development to miniaturize the electronics that have gone into this super thin fingerprint reader. A standard credit card is no more than 0.85mm thick. We have had to push the envelope in the field of electronics to create this…, ” said the company’s president and CEO, Chaya Hendrick.
-Jim Miller, CEO of San Diego-based ImageWare Systems, was interviewed by a publication in the data security industry. He had some interesting comments on the company’s current business strategy. ImageWare recently won the 2017 Frost & Sullivan New Product Innovation Award and is considered a pioneer in biometrics, with a business history that goes back two decades. The company built its early business on products for the law enforcement sector. Later on it moved into secure biometric credentialing and cloud-based authentication of smart mobile devices. Miller went on to the list the industrial sectors that are rapidly adopting biometric technology; banking, financial services, retail, healthcare, government and education. “We have a wide portfolio of foundational intellectual property, which is testimony to our pioneer status in the industry,” said Miller in the interview. “Our work using biometrics for physical and logical access control can be seen in identity management systems employed by such flagship customers as the Canadian TSA, US Veterans Administration, Los Angeles World Airports, and most recently, with our contract award for five Alaskan airports.” The company also recently pioneered cloud-based delivery of biometrically-enabled driver’s licenses. Another big contract is with a company called FEMSA, described as “the largest independent Coca Cola bottler in the world… with over 375 million customers across Mexico and Latin America.” According to Miller, “We live in a world where our digital identity is the bridge to our human identity. The ‘Internet of things’ (IoT) is essentially a giant network of connected ‘things’ …[but] anything connected to your network is now a potential breach point; it makes data security more complex, information governance more complicated, and your corporate and customer data more vulnerable… We have seen too many times how this story ends – a single tablet or smartphone contains credentials to the entire corporate network and this ‘simple thing’ can end up costing employers millions.”
-Investors do not seem to be spooked by recent rumors about a delay in the newest version of the iPhone. A report in the financial trade press notes that the iPhone is the single largest source of revenue for Apple these days, so any delays in the latest version could have consequences for the stock. Over the past couple weeks several media reports have suggested the latest model will be delayed. Most recently it was reported that production levels at Apple’s two largest contract manufacturers, Foxconn and Pegatron, “…remain low, and volumes haven’t reached mass-production levels.” According to the story Apple usually begins mass production of new phones in June and July for launch in the fall. According to the rumors mass production will not happen until August. Part of the problem is said stem from problems merging the Touch ID into the [new OLED] display. Apple is said to be considering ditching the fingerprint sensor altogether in favor of 3D facial recognition. Even so shares in Apple have managed to hang in around $150 a share of late. It seems investors are already pricing the delay into the stock price. An analyst with Morgan Stanley released a report this past week raising the price target on Apple from $177 to $182. The analyst worked expected delays into the financial model underpinning the prediction.
-Shares of Diebold Nixdorf were moving up this week. A recent decision by the International Trade Commission concerning a patent infringement claim by Korean firm Nautitlus Hyosung likely contributed to the optimism. The board of directors also announced this week a third quarter cash dividend of 10 cents per share. The company sent corporate reps out on the road this summer in an 18-wheeler. The truck is travelling across the U.S. to show off a mock-up of possible future retail bank branches. One of the new ATMs on display features, “… cardless payments, near field communication, beacon technology, biometric authentication, predictive analytics, [and] artificial-intelligence-customized shopping experiences.” Shares in Diebold moved up from $20.65 last week to trade at almost $23 this week.
-A major feature appeared on the popular website The Intercept this week. The Intercept is staffed by progressive-minded journalists like Jeremy Scahill and Glenn Greenwald (one of the journalists first contacted by Edward Snowden). The biometric-related piece posted this past week detailed a recent meeting by thirty-one sheriffs in the U.S. The group is composed of sheriffs from every county along the Mexican border. The group voted unanimously this spring to adopt a biometric platform offered for free by Biometric Intelligence and Identification Technologies (also known as B12). The company offered the sheriffs a free three-year trial of iris scanners to be used to create “digital wall” to reinforce Trump’s physical border wall. The story notes the agreement to provide the scanners for free will benefit B12 by allowing the company to collect a huge amount of, “… biometric information on unauthorized immigrants, boosting its product’s capabilities to potential law enforcement clients across the country.” In the month’s to come BI2’s iris scanning devices, “… will be installed in every sheriff’s department along the U.S.-Mexico border. Each department will receive both a stationary iris capture device for inmate intake facilities and, eventually, a mobile version…” One of the sheriffs involved in the program was quoted as saying, “Technology is the way to go. It’s not unusual for people caught illegally from Mexico to give fake names and date of births. But it doesn’t matter what you use if we have your features — your iris, your fingerprints. You can use a hundred different names. We still can say, ‘This is the guy.'”
-Another recent media report notes that police in India are combating fraud around the registration of citizens into that country’s Aadhaar program. Aadhaar, of course, is the world’s largest biometric database and is said to involve a billion people. But it seems some of those tasked with registering citizens are demanding bribes to get people into the program. In one case a worker hoping to have his address changed, “…approached an official Aadhaar outlet but was turned away. An agent later contacted him and the address was changed in just five minutes. He, however, had to pay for a service that is absolutely free.” An economist was quoted in the story as saying, “The poor people are especially vulnerable to this menace…. You and I may not have to pay bribe but many poor people may not even know the rules.” Police are also investigating incidents in which people who lack proper ID have been registered in the program after paying a bribe.
-The Indian government ministry tasked with administering the program (The Unique Identification Authority of India, or UIDAI) recently released a report saying that, to date, the system has, “… not faced any cyber attack.” The announcement was in response to a media request.
-An Indian bank, DCB Bank, recently announced it had installed an ATM that does not require a debit card but verifies a customer through Aadhar card details, “… including the iris and the fingerprint of the customer.” The ‘first of its kind’ ATM was recently installed in the city of Telangana according to a press release from the bank. Aadhaar is the word for ‘foundation’ in Hindi.
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