EUR 927.06 For Business Accounts Only

Mimecast: Initiate with a BUY and $30PT

​Initiate with a BUY and $30PT: We initiate coverage of Mimecast (MIME), an innovative and pure play email security-as-a-service vendor, with a BUY rating and a $30 PT (~40% upside from current levels). Mime currently trades at 4.2x versus Proofpoint (PFPT) at 5.0x (25% discount) on EV/C2018 sales, still at a discount to high growth software peer group average of 4.9x. Mimecast is in the business of making email safe by providing security, archiving and continuity solutions. While Mimecast came into prominence by providing email solutions to midmarket customers (SMB/SMEs), we believe Mimecast’s growing enterprise business is underappreciated. We spoke to several clients who have worked with both PFPT and MIME solutions, and many customers swear by the product and tell us that the solution is almost as good as the PFPT solution, while being lower priced. Mimecast multi-tenant platform is built organically for the cloud and is considered one of the best in the industry. Given that email is one of the most targeted vectors, Mimecast technology and its products are known to secure email effectively for companies of all sizes. Combined this with high revenue retention rates (excess of 110%) and a large TAM ($11.5bln), Mimecast has large headroom to grow for years to come. We believe consensus estimates are conservative with revenue forecasted to grow 25% and 21% in F2018 and F2019, respectively. On a constant currency basis, we expect Mimecast to consistently grow north of 30%. We expect Mimecast to beat and raise estimates, which should lead to multiple expansion and price appreciation.