KeyBanc Out Bullish On Avast, Highlights Multibillion-Dollar Addressable Cybersecurity Market

London-listed Avast PLC is a consumer-focused cybersecurity software company that boasts 435 million users globally and is trading at an attractive valuation given the size of the market it addresses, according to KeyBanc Capital Markets. 

The Analyst

Analyst Rob Owens initiated coverage of Avast with an Overweight rating and a U.S. dollar equivalent price target of $3.63. 

The Thesis

Headlines about large-scale threats and cyberattacks targeting businesses and governments are attention-grabbing, but at the same time, individuals are also victims of cyberattacks, Owens said in the Wednesday initiation note. 

An estimated 978 million consumers were affected by some form of cyber crime in 2017, which implies the $5.5-billion market Avast looks to address is a top-five market within the security universe, the analyst said. 

Avast is expanding its total addressable market beyond the $5.5-billion consumer-focused segment into the Internet of Things and cloud-based SMB security market, Owens said. The size of this adjacent market could be as high as $21 billion, he said. 

Avast boasts a best-in-class margin profile with its low-touch and freemium sales model, the analyst said.

The company's more than 80-percent gross-margin profile coupled with a friendly home base in the Czech Republic translates to an EBITDA margin of more than 50 percent, according to KeyBanc. 

Price Action

Shares of London-listed Avast were trading higher by 0.23 percent at the time of publication Wednesday morning. 

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Photo courtesy of Avast.