UPDATE: Imperial Capital Initiates Zix at Outperform on Attractive Growth Opportunities

In a report published Thursday, Imperial Capital analyst Michael Kim initiated coverage on Zix (NASDAQ: ZIXI) with an Outperform rating and $5.50 price target.

In the report, Imperial Capital noted, “We believe ZIXI is a top-tier email encryption service provider and is strongly positioned to capitalize on expanding adoption by organizations seeking to protect their email communications due to security concerns and compliance requirements. ZIXI possesses an established base of more than 8,700 corporate customers, with significant penetration in the healthcare, financial, and government verticals. We believe the company's third-party channel expansion could drive broader market reach. We believe ZIXI's multi-year subscription model offers attractive financial visibility; we anticipate continued strong growth in paid end-users and stable pricing, bolstered by 90% contract renewal rates. Near-term revenue is supported by sizeable backlog. We see potential upside from ZIXI's recently introduced and upcoming products, which could offer significant cross-selling opportunities and new customer wins. We look for increasing sales contribution from e-mail data loss prevention and mobile data security.”

Zix closed on Wednesday at $3.80.