SafeNet: Classified Security Business May Bait Buyers

Feb.28.07 | About: SafeNet Inc. (SFNT)

Daniel Ives, an analyst with Friedman, Billings, Ramsey, yesterday raised his rating on SafeNet (SFNT) to Outperform from Market Perform.

He also increased his price target on the security software company to $34 from $20, and increased his 2007 estimates on the company; he now sees $319.6 million in revenue and EPS of $1.31 a share, up from $315 million and $1.22. In part, the higher estimates reflect an expectation that the company’s stock-option backdating probe is nearing completion, resulting in reduced related expense levels.

Ives also thinks the company could be an attractive buyout candidate, putting its break-up value at $30 to $36 a share; he says buyers could be attracted by its classified security business, which he calls the company’s “crown jewel.”

The company plans to report fourth quarter results on March 7; the announcement was originally scheduled for February 23, but was postponed.

SafeNet yesterday was down 87 cents at $26.89. (That’s roughly in line with yesterday’s 3.5% decline on the Nasdaq Composite.)

SFNT 1-yr chart

sfnt chart