mid-cap

Buy Scenario on These NASDAQ-Listed Stocks – BYND, BAND

Dec 15, 2021 12:00 AM PST | Team Kalkine
Buy Scenario on These NASDAQ-Listed Stocks – BYND, BAND

Beyond Meat, Inc.

BYND Details

Beyond Meat, Inc. (NASDAQ: BYND) is a company that makes plant-based meats such as burgers, sausage, ground beef, and chicken. It creates meat straight from plants, a breakthrough that allows customers to enjoy the taste, texture, and other sensory characteristics of popular animal-based meat products while reaping the environmental benefits of consuming its plant-based meat products. Its goods were accessible in about 128,000 retail and foodservice establishments in over 85 countries as of September 2021.

Latest News:

  • Industry Veteran Appointments: BYND announced the appointment of two food industry experts to its senior leadership team on December 08, 2021. Doug Ramsey comes as Chief Operating Officer (COO) after three decades at Tyson Foods, responsible for the poultry and McDonald's divisions. After more than three decades in operations and supply chain management at Tyson Foods, Bernie Adcock will report to Ramsey in the newly created Chief Supply Chain Officer role.

9MFY21 Results:

  • Progress in Revenues: The company's total revenues increased by 19.41% during 9MFY21 (ended October 02, 2021) to USD 364.02 million from USD 304.85 million during 9MFY20 (ended September 26, 2021), primarily driven by the expansion of overall distribution, accelerated orders, and contribution from newly introduced products.
  • Increase in Losses: BYND witnessed an increase in net losses of USD 101.73 million during 9MFY21 from USD 27.68 million reported during 9MFY20 due to a significant increase in operating expenses.
  • Leveraged Balance Sheet: As of October 02, 2021, the company's cash and cash equivalents stood at USD 886.44 million, with total debt (including finance lease liabilities) of USD 1.13 billion.

Key Risks:

  • Reliance in Third Parties: BYND has signed a multi-year plant-based protein sales agreement with one of its third-party pea protein suppliers, requiring it to purchase specified minimum monthly and semi-annual volumes during the duration. If it cannot replace these suppliers promptly, any disruption in the supply of pea protein or other raw materials would significantly negatively impact its business.

Outlook:

  • Q4FY21 Estimates: In its Q3FY21 news release, BYND stated that near-term uncertainty over COVID-19 and its possible influence on demand levels, labor availability, and supply chain disruptions continue to impair its operating environment. BYND expects revenues in the range of USD 85 – 110 million in the Q4FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(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.

BYND Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

BYND's stock price has fallen 53.69% in the past six months and is currently leaning close to the lower end of its 52-week range of USD 62.06 to USD 221.00. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 37.15. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 80.73.

Considering the significant correction in the stock price, improvement in topline, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 67.25, up 6.04% as of December 14, 2021, 11:45 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

 

Bandwidth Inc.

BAND Details

Bandwidth Inc. (NASDAQ: BAND) is a cloud-based communications platform-as-a-service (CPaaS) provider that enables organizations to build, scale, and execute voice and messaging communications services on any mobile app or connected device. Monthly service fees for its software APIs, payments for services like SIP trunking, data reselling, a hosted Voice-over-Internet Protocol service (VoIP), traffic created by other service carriers, SMS registration fees, and other linked product lines provide the company with revenue. As of December 14, 2021, the company's market capitalization stood at USD 1.81 billion.

Latest News:

  • Extending 911 Emergency Services: On December 08, 2021, BAND secured three new collaboration agreements expanding its capabilities in 911 emergency services ahead of the RAY BAUM'S Act compliance deadline of January 06, 2022. 911 Secure, 911inform, and 9Line Software provide a full-stack emergency services solution for major companies, connecting Avaya, Cisco/BroadWorks, Mitel, and other common non-fixed IP-based communications systems.

Q3FY21 Results:

  • Improved Revenues: The company reported a sharp 54.13% increase in total revenue to USD 130.64 million in Q3FY21 (ended September 30, 2021) from USD 84.76 million in Q3FY20 primarily due to a 45.57% increase in CPaaS revenue.
  • Growth in Active CPaaS Customers: BAND's active CPaaS customers surged 57.47% to 3,173 in Q3FY21 vs. 2,015 in Q3FY20.
  • Increase in Net Losses: Its Q3FY21 net loss amounted to USD 6.94 million compared to USD 2.35 million reported in Q3FY20.
  • Balance Sheet Position: BAND exited the quarter with a cash balance of USD 321.82 million and total debt of USD 479.57 million.

Key Risks:

  • Customer Concentration: A limited number of enterprise clients account for a large amount of BAND's revenue. As a result, losing any of its key customers could harm its bottom line.
  • Reliance on Third-Party Suppliers: Third-party suppliers offer Fiber, transmission electronics, network components, and colocation facilities for BAND. As a result, if these suppliers fail to deliver these critical items, BAND's operations and financial position could suffer considerably.

Outlook:

Q4FY21 and FY21 Guidance (Source: Q3FY21 Earnings Release, November 08, 2021)

 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(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.

BAND Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

BAND's share price has declined 47.11% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 62.07 to USD 196.70. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 42.57. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 88.87.

Considering the significant correction in the stock price in the past nine months, strong topline performance, growth in CPaaS customers, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 69.73, down 3.21% as of December 14, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.