H.C. Wainwright analyst Scott Buck reiterated a Hold rating on Intrusion (INTZ – Research Report) today and set a price target of $3.00.
Scott Buck has given his Hold rating due to a combination of factors that reflect both the challenges and potential within Intrusion Inc. Despite some positive developments, such as recent contract wins and a promising pipeline for new business, the actual revenue figures have not yet demonstrated significant growth, coming in below expectations. Furthermore, the company’s reliance on a major Shield customer, which constituted over 80% of that product’s revenue and is not renewing its contract, poses a substantial risk to future revenue stability.
On the financial side, Buck notes that while Intrusion has effectively reduced operating expenses, which has helped to mitigate the impact of declining revenue, the company’s cash position is weak, with just $0.1M of available cash, necessitating funding of operations through an at-the-market (ATM) offering program. This reliance on external capital to sustain daily operations is not seen as a sustainable long-term strategy. Additionally, the lack of visibility on revenue growth and the challenges the company may face when attempting to raise capital in the market contribute to the Hold rating. Despite the optimism around the Shield product and its high gross margin, which indicates potential for significant operating leverage, Buck remains neutral until the company can address its near-term balance sheet concerns or demonstrate a significant increase in Shield contracts.
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Intrusion (INTZ) Company Description:
Intrusion, Inc. engages in the provision of network security solutions. It specializes in the development, and marketing of entity identification, high speed data mining cybercrime and advanced persistent threat detection products. The company supports a range of customers including United States federal government entities, local government, banks, airlines, credit unions, and other financial institutions as well as hospitals, and other healthcare providers by providing products such as TraceCop for identity discovery and disclosure, and Savant for network data mining and advanced persistent threat detection. Intrusion was founded by T. Joe Head and G. Ward Paxton in September 1983 and is headquartered in Richardson, TX.
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