NXT-ID, Inc. (NASDAQ: $NXTD) Equity Research Update from Maxim Group; Spin-Off of PartX Delayed, Probably Until Late February/ Early March - Reiterate $2 PT for Stand-Alone LogicMark
Point Roberts - January 23, 2019 (Investorideas.com Newswire) Investorideas.com, a global news source and investor resource covering tech stocks reports Maxim Group has issued an update on NXT-ID, Inc. (NASDAQ: NXTD) following recent news and an update on the Company’s proposed spinoff of its payment division.
NXT-ID, Inc. (NXTD - NASDAQ - $1.25)
Buy
Target Price: $2.00
Spin-Off of PartX Delayed, Probably Until Late February/ Early March - Reiterate $2 PT for Stand-Alone LogicMark
Michael Diana
(212) 895-3641
Excerpt -
Summary:
- On September 21, 2018, NXTD announced its intention to spin off its Fit Pay subsidiary (to be re-named PartX), and subsequently established a record date of October 17. On October 17, NXTD shares started trading without (any value for) PartX (that is, just reflecting the value of its healthcare subsidiary, LogicMark). On December 17, it was announced that the spin-off was delayed, and the October 17 record date was withdrawn, so NXTD shares now trade with the values of both LogicMark and PartX included. A new record date has not yet been announced.
- On January 15, NXTD announced that it had signed a letter of intent for a new $16.5M
senior secured term loan, which will be used to pay off NXTD's existing loan facility (which contains a covenant that effectively prohibits the spin-off). The new term loan is expected to close around late February/early March, at or about which time the spin-off should also occur. Sometime between now and then, a new record date should be announced, at which time NXTD shares should again trade without any value for PartX (that is, just reflecting the value of LogicMark). - Notwithstanding that NXTD shares temporarily trade (until late February/early March) with the values of both LogicMark and PartX included, our price target of $2 and our 2019 estimates are for stand-alone, post-spin LogicMark/NXTD. See page 2 for our earnings model.
- Our price target represents, relative to other small-cap healthcare/medical devices companies, a discount to multiples of 2019 enterprise value (EV)/revenue and of 2019 EV/adjusted EBITDA, reflecting NXTD's small market cap and early stage of development.
- We note that there have been many positive recent developments at Fit Pay/PartX (see below).
Details:
Fit Pay/PartX update. Many positive recent developments include: 1) Fit Pay is going to provide tokenization services to enable SwatchPAY! contactless payments with Swatch watches; 2) GarminPay (powered by Fit Pay) was added to an 11th Garmin (GRMN - NR) smartwatch, and the network of banks supporting GarminPay now numbers 260 banks in 30 countries; and 3) Fit Pay expects to start shipping Flip, its contactless payment device for Bitcoin, on February 13. The announcement from Swatch (UHR.S - NR) is especially important, in our view, in that it "represents a big step towards making contactless and wearable payments more mainstream," in the words of the Fit Pay press release.
Maintain $2 PT for stand-alone, post-spin LogicMark/NXTD. Relative to other healthcare/medical devices companies, our $2 price target represents a discount to multiples of EV/revenues (3.0x versus an average of 4.9x) and to multiples of EV/adjusted EBITDA (12.9x versus an average of 18.1x). The discounts reflect NXTD's small market cap and early stage of development, in our view. NXTD shares are currently trading at a 2019 EV/revenue multiple of 2.1x and an EV/adjusted EBITDA multiple of 9.1x.
Recent company news:
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Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp. Disclosure: Nxt-ID, Inc. (NXTD) is a long term paid news publication and PR client of Investorideas.com. details at https://www.investorideas.com/About/News/Clientspecifics.asp
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