BY CNA Team - November 9, 2018
JP Morgan picks out potential blockchain winners
Companies that offer blockchain as a service (BaaS) and the ability to disrupt the business of the middleman are the ones investors should look out for when picking stocks with exposure to blockchain technology.
JP Morgan picked Akamai, DocuSign and Ellie Mae as companies who can benefit from blockchain technology the same way as how others claimed that machine learning and artificial intelligence have benefitted them.
It says in a recent report that these companies are the ones that can create “material incremental growth opportunities” and their stocks are the ones investors should look out for as potential long-term winners.
All three are in the investment bank’s coverage universe. Akamai, a cloud service provider, is rated “overweight”, DocuSign, which can digitalise the entire contracting process, is also rated “overweight” while Ellie Mae, which uses blockchain to validate the property mortgage process, is rated “underweight”.
“Investors should be looking to identify where the opportunity to replace a middleman is the biggest, or where trust is needed where none exists, or what companies are the best positioned to offer blockchain as a service,” JP Morgan’s software equity research analyst Sterling Auty says.
He says Akamai’s sizeable network is an inherent advantage in running a distributed ledger in blockchain, adding that customers who do not want to build a blockchain platform from scratch can utilise the company’s BaaS capabilities.
Auty sees DocuSign’s service of digitalising the entire contracting process shifting to a decentralised model over time and leveraging on both private and public blockchains.
Also, he predicts Ellie Mae as benefitting from the use of the technology in managing the entire mortgage process, automating tasks and bringing trust among parties.
Image courtesy of Ellie Mae, DocuSign and Akamai website.