ON24, Inc.

ONTF Details

Increased Application of ON24 Platform: ON24, Inc. (NYSE: ONTF) provides a cloud-based digital experience platform that enables to create, scale, and personalize impactful experiences to drive business growth. The market capitalization of the company as on 09 June 2021, stood at ~$1.60 billion. The company has witnessed an increased traction in companies to shift to digital-first engagement with webinars. It has analyzed and found out that more than 2,000 organizations, delivering over 100,000 digital experiences with at least 100 attendees have used the ON24 platform during the past year.

Expansion of ON24 Platform to Japan: The company has recently announced the availability of the ON24 Digital Experience Platform in Japanese. This reflects its focus to scale operations along with ongoing investments in the Asia-Pacific region to support its increasing customer base.

Q1FY21 Results Update: The company reported robust growth in revenues by ~102% to $50.1 million, compared to the previous corresponding period. The digital experience platform revenue has grown by ~111% to $50 million during the same time period. ARR grew by ~90% to $163.1 million as of 31 March 2021. The net loss stood at $3.4 million in Q1FY21. Cash flow from operations stood at $3.7 million in Q1FY21, compared to $1.3 million on the pcp.

Uptrend in Revenue Performance (Source: Company Reports)

Key Risks: The company is prone to stiff competition from its peers and as such, there is a risk of losing market share if it fails to offer engaging solutions to its clients.

Outlook: ONTF is optimistic about its prospects going forward. It expects total revenue of $50.5 million to $51.5 million in Q2FY21 and full-year FY21 revenue to be between $207.5 to $210.5 million. It also anticipates operating income of $0 to $1.0 million in Q2FY21 and full-year operating loss to be between negative $2 million to positive $1 million operating income.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: It ended Q1 with a decent cash position of ~$388 million as of 31 March 2021. The stock of ONTF is trading below its average 52-weeks’ levels of $81.98-$31.03. The stock of ONTF gave a negative return of ~12.78% in the past one month and a positive return of ~6.52% in the past one week. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the decent financial performance and growth in ARR of the company. For this purpose, we have taken peers such as Avalara Inc (NYSE: AVLR), Domo Inc (NASDAQ: DOMO), Materialise NV (NASDAQ: MTLS), to name a few. Considering the expected upside in valuation and current trading levels, impressive financial performance, expansion of ON24 platform into Japan and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $34.60, down by ~4.79% as on June 09, 2021.

ONTF Daily Technical Chart, Data Source: REFINITIV

 

Tupperware Brands Corporation

TUP Details

Q1FY21 Performance Update: Tupperware Brands Corporation (NYSE: TUP) is a consumer products company that designs innovative and environmentally responsible products. The market capitalization of the company as on 09 June 2021, stood at ~$1.22 billion. During Q1FY21, the net sales increased by ~22% to $460.3 million, when compared to the previous corresponding period. It managed to post a turnaround and reported net income at $45.3 million, compared to a loss of $7.8 million in the previous corresponding period. EBITDA grew by ~551% to $88.6 million on the pcp. It ended the period with a cash balance of $154.8 million as of 27 March 2021.

Financial Position as of 27 March 2021 (Source: Company Reports)

Key Risks: The COVID-19 pandemic and its aftermath might pose a risk to the company’s supply chain operations and also the demand of the products given the overall impact on the macroeconomic environment.

Outlook: The company’s decent financial performance reflects the strengthening fundamentals of the company, as it continues to make use of digital tools to address customer needs. Moreover, the reduction of debt will lead to a prospective fifty-basis point interest rate reduction, which augurs well for TUP.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The company has recently announced the expansion of its ECO+ product portfolio and added Lunch-It Containers and Sandwich Keepers. It also added Tritan Renew from Eastman, as a new material partner. The stock of TUP is trading above its average 52-weeks’ levels of $38.59-$4.00. The stock of TUP gave a negative return of ~4.17% in the past one month and a positive return of ~11.58% in the past nine months. We have valued the stock using a P/E multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade a slight premium to its peer median P/E (NTM Trading multiple), considering the improvement in performance, expansion of product range and decent cash balance. For this purpose, we have taken peers such as Newell Brands Inc (NASDAQ: NWL), La-Z-Boy Inc (NYSE: LZB), to name a few. Considering the expected upside in valuation, turnaround in net income, improvement in top-line and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $24.76, down by ~3.73% as on June 09, 2021.

TUP Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.