NEW YORK (TheStreet) -- Shares of Zix Corp. (ZIXI) - Get Zix Corporation Report are higher by 10.49% to $4.32 in early afternoon trading on Thursday, after the company announced its has entered into an OEM relationship for the development and distribution of enhanced email encryption solutions with Cisco Systems (CSCO) - Get Cisco Systems, Inc. Report.
"The partnership will focus on two solutions in 2015 - an enhancement of the Cisco IronPort Encryption Appliance (IEA) and a new solution that integrates proven components of Cisco and Zix technology. Both solutions will be distributed by Cisco," Zix said in a statement.
The updated version of the Cisco IEA will include new hardware and software patches to protect against new security threats, the statement continued.
"The new partnership with Cisco offers IEA customers an extended e-mail encryption product with all the same features and user look and feel as they have today. It also enables the Cisco channels to distribute a new combined solution that we believe will be attractive to high-end, enterprise customers. We appreciate Cisco recognizing the competitive advantages of our combined solutions, and we look forward to a mutually beneficial relationship that fosters innovation for customers," said Zix CEO Rick Spurr.
"Zix didn't provide financial details of the partnership, but we note that its OEM efforts have been a significant growth driver in recent quarters. A marquee partner, such as Cisco, could also increase the total addressable market for Zix's new bring-your-own-device and data loss protection products."
Want more information like this from David Peltier and more of Wall Street's sharpest minds? Learn more about Stocks Under $10 Now.
Separately, TheStreet Ratings team rates ZIX CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZIX CORP (ZIXI) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ZIXI's revenue growth trails the industry average of 18.6%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- ZIXI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
- Net operating cash flow has decreased to $2.74 million or 22.28% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The share price of ZIX CORP has not done very well: it is down 12.09% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: ZIXI Ratings Report