OneSpan (OSPN): A Contrarian Play Ahead of Q2 Earnings?

OneSpan (OSPN), a provider of digital security solutions, is currently trading at a valuation discount that contrarian investors may find compelling. With its August 5 earnings report approaching and a mix of favorable metrics and catalysts on the horizon, OSPN presents an intriguing opportunity for investors willing to bet against the crowd. Let's dissect the data to uncover why this stock could be primed for a rebound.

Valuation Discount: A Contrarian's Starting Line

OneSpan's valuation metrics scream undervalued. As of July 2025, its Forward P/E ratio of 11.85 is roughly half the industry average of 28.74 (). Meanwhile, its Price-to-Sales (P/S) ratio of 2.51 is 45% above the industry average, but this premium is justified by its focus on high-growth cybersecurity segments.

Crucially, a Simply Wall St. analysis from 28 days ago estimates OneSpan's intrinsic value is 26% higher than its current price, projecting a fair value of $20.52. This implies significant upside from its July 11 closing price of $15.77.

Zacks Rank Dynamics: Neutral Momentum, Strong Sector Tailwinds

OneSpan holds a Zacks Rank of #3 (Hold), which suggests neutral momentum. However, its Zacks Industry Rank of 46 places it in the top 19% of all industries tracked, with the Internet-Software sector historically outperforming 2-to-1 compared to lagging sectors.

The contradiction here is key: While OneSpan's stock is rated “Hold,” its industry is booming. This misalignment could create a buying opportunity. Historically, #1-ranked stocks (Strong Buy) have averaged +25% annual returns, and while OneSpan isn't there yet, its analyst consensus of “Buy” and a 27.42% upside price target suggest optimism isn't entirely absent.

Upcoming Catalysts: Earnings and Acquisition Synergies

The August 5 earnings report is the next major catalyst. Analysts predict a $1.45 annual EPS (+9.85% YoY) despite flat revenue. A beat on EPS or positive guidance could re-rate the stock, especially if the Nok Nok Labs acquisition—closed in June—begins delivering synergies. This move strengthens OneSpan's position in FIDO passwordless authentication, a fast-growing niche.

Risks: Volatility and Near-Term Headwinds

The stock's -10.14% drop in its last session underscores its volatility. Risks include:
- Flat revenue growth: Analysts project $0 million YoY change, which could disappoint.
- Zacks' “Hold” bias: The rank may deter short-term traders.
- Sector rotation: If tech underperforms, OneSpan could lag despite its industry rank.

Why Now? Contrarian Edge Ahead of Earnings

The contrarian case hinges on two factors:
1. Valuation asymmetry: The stock trades at a P/E discount while its intrinsic value suggests 26% upside.
2. Industry tailwinds vs. stock underperformance: The software sector's strength hasn't yet lifted OneSpan, creating a divergence to exploit.

Investment Thesis: Position Ahead of Earnings

Buyers should consider:
- Entry point: The $15.77 level, with a stop-loss below $14.50.
- Target: The $20.52 intrinsic value or the $19.50 consensus price target.
- Catalyst timing: Earnings on August 5 and post-call reactions could trigger momentum shifts.

Final Take

OneSpan is a valuation-driven contrarian bet with near-term catalysts. While risks like flat revenue loom, the stock's discounted metrics, sector leadership, and upcoming earnings make it a candidate for 5–10% upside in the next 2–3 months. For investors with a tactical horizon, OSPN offers a compelling mix of discounted value and growth catalysts.

Stay tuned for the August 5 earnings call—it could be the spark to ignite this undervalued stock.

Disclaimer: This analysis is for informational purposes only. Always conduct your own research and consult a financial advisor before making investment decisions.