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small-cap

Buy, Watch or Sell for these three US stocks: Blink Charging, EverQuote & BEST

Jun 24, 2021 | Team Kalkine
Buy, Watch or Sell for these three US stocks: Blink Charging, EverQuote & BEST

 

Blink Charging Co

Blink Charging Co (NASDAQ: BLNK) is the owner, provider and operator of electric vehicles charging equipment and devices.

Investment Highlights – Blink Charging Co – Watch at USD 39.87

  • The Company has been consistently reporting net loss since FY17.
  • The Company had reported a net loss of more than 340% from the total revenue during Q1 FY21.
  • The Return on Equity and Return on Assets are falling in the negative territory.
  • The stock is volatile as it moved more than 1300% in the last one year.
  • From a technical standpoint, 14-day RSI seems unfavourable and resist the upside potential in the stock price.

Key Risks

  • The acquisition of Blue Corner N.V may not achieve desired synergies.
  • There are also certain risks and uncertainties associated with administrative complexity, increased competitive pressure, complying with changing regulations, external threat to security systems, among others.
  • The high volatile nature could cause adverse movement in the stock price.

Recent Developments

 On 23 June 2021, Miko de Haan has been appointed as the Managing Director of Blink Holdings B.V. to accelerate the progress of the European operations.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 13 May 2021)

 (Source: Company result)

  • BLNK had reported an increase of around 72% in the total revenue to USD 2.2 million during Q1 FY21, while it was USD 1.3 million for Q1 FY20.
  • The Company had widened the net loss from negative USD 2.96 million during Q1 FY20 to negative USD 7.36 million for Q1 FY21.
  • The cash & marketable securities stood at USD 232.2 million as of 31 March 2021.

Share Price Chart

(Analysis done by Kalkine Group)

Conclusion

The Company had consolidated its footprints in European Electric Vehicles through the acquisition of Blue Corner N.V Moreover, Blue Corner chargers are located across Belgium, Luxembourg, the Netherlands, and France. The European EV market is growing faster than the United States. The Company would continue to seek lucrative market opportunities and expected to perform well for the remainder of 2021. However, the consensus estimates indicate that the Company would achieve bottom-line profitability only by 2024. The stock made a 52-week low and high of USD 2.40 and USD 64.50, respectively.

Based on the weak profitability and various points mentioned above, we have given a "Watch" stance on Blink Charging Co at the closing market price of USD 39.87 (as of 23 June 2021), while we will update when we identify fresh growth catalysts for the Company.

EverQuote Inc

EverQuote Inc (NASDAQ: EVER) is an online insurance marketplace for insurance shopping in the United States.

Investment Highlights – EverQuote Inc – Speculative Buy at USD 34.23

  • The revenue and adjusted EBITDA had shown a significant increase during Q1 FY21 as compared to Q1 FY20.
  • EVER had projected year-on-year revenue growth of around 30% during Q2 FY21 and almost 26% for FY21. It has also raised the revenue guidance driven by impressive Q1 FY21 results.
  • The Company does not have any debt on the balance sheet.
  • The digital carriers had shown an outstanding growth of around 200% in the spending on the Company’s platform.
  • From a technical standpoint, 20-day EMA (USD 33.26) supports the upside potential in the stock price.

Key Risks

  • Failure in cybersecurity and a critical data breach could hamper the operation as well as the reputation of the company.
  • Changes in government policies and regulations could affect the overall business of the Company.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 03 May 2021)

(Source: Company result)

  • The Company had achieved robust revenue growth of around 28% to USD 103.82 million during Q1 FY21.
  • On the profitability front, the adjusted EBITDA rose from USD 3.8 million for Q1 FY20 to USD 4.8 million during Q1 FY21.
  • The Variable Marketing Margin (VMM) had shown a growth of 32% to USD 31.4 million during Q1 FY21.

Share Price Chart

(Analysis done by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (Illustrative)

Conclusion

The Company had anticipated FY21 revenue ranging from USD 434 million to USD 442 million, an increase from the previous guidance. Moreover, EVER had also raised FY21 guidance for the Variable Marketing Margin and kept it between USD 136 million and USD 140 million during FY21. EVER would focus on making strategic investments to attract more and deepen consumer-provider engagement and further expand the non-auto verticals. The stock made a 52-week low and high of USD 28.56 and USD 63.44, respectively.

The next important support level on the technical chart is at USD 28.59.

Based on the robust revenue growth and valuation method shown above, we have given a "Speculative Buy" stance on EverQuote Inc at the closing market price of USD 34.23 (as of 23 June 2021), with a lower double-digit upside potential based on a 54.09x Price/NTM Cash flow per share (approx.) on FY21E cash flow per share (approx.).

BEST Inc

BEST Inc (NYSE: BEST) is a China-based supply chain company that provides a new retail platform to offer solutions related to supply chain management, freight, and cross-border supply.

Investment Rationale for Valuation – SELL at USD 1.81

  • As of Q1 FY2021, BEST is still a loss-making entity.
  • Due to uncertainty in the market and lack of visibility, the management could not provide detailed guidance for FY2021.
  • On the profitability front, the net margin since FY2020 has been lower than the industry median of 6.4%.
  • On the liquidity front, the current ratio since FY2020 has been lower than the industry median of 1.38x.
  • On the leverage front, the debt/equity ratio in Q1 FY2021 at 4.90x has been significantly higher than the industry median of 0.61x.
  • From a technical standpoint, 14-day RSI at about 68.55 is sustaining just below the overbought zone. Hence, there could be potential short-term downward movement in the stock price.

Risk Assessments

  • BEST is currently a loss-making business. Hence, it could face a liquidity crunch.
  • It is dependent on external funding to run its operations. Hence, operations could get disrupted if there is an issue with external funding.
  • Fresh restrictions could impact BEST’s operations, affecting its margins.
  • The rapidly evolving competitive environment requires BEST to adapt quickly.
  • The stock price has fallen around 62.13% in the last year, which raises doubts about its potential.

Financial Highlights for the quarter ended 31 March 2021 (as of 8 June 2021)

 (Source: Company Website)

  • Express Service Revenue increased by 10.0% YoY, driven by an increase in parcel volume. Also, the increase in parcel volumes led to an increase in Global Service Revenue by 116.3% YoY.
  • Freight Service Revenue surged by 70.9% YoY, fuelled by a rise in freight volume.
  • Supply Chain Management Service Revenue increased by 9.8% YoY, driven by a rise in the total number of orders fulfilled.
  • It led to a total revenue increase of 29.9% YoY in Q1 FY2021. However, BEST still made net losses, which was reduced by ~17.5% YoY.

Share Price Chart

(Analysis done by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (NTM) (Illustrative)

Conclusion

BEST has shown a top-line growth and lower net loss in Q1 FY2021. However, the shape and speed of the global recovery from the Covid-19 pandemic remain uncertain, and the management could not provide detailed guidance for FY2021.  Hence, it would be prudent to liquidate the position at a profit. Overall, we do not have significant catalysts to support an uptick in the stock price and recommend exiting the position currently. The stock made a 52 week High and Low of USD 1.11 and USD 4.86, respectively.

Considering the lack of detailed guidance, a loss-making business, poorer profitability, liquidity and leverage position of the Company than the industry, and unfavourable valuation as done using the above method, we have given a “SELL” recommendation on BEST Inc at the closing market price of USD 1.81 (as of 23 June 2021), while we will revisit our stance based on the analysis of future corporate announcements released by the Company.

 

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

*All forecasted figures and Peer 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 or if the price closes below the support level (indicative stop-loss price).