Freeport-McMoRan Inc

Freeport-McMoRan Inc (NYSE: FCX) is an international mining entity holding significant proven and probable reserves of copper, gold, and molybdenum.

Investment Rationale – WATCH at USD 38.22

• On 5 August 2021, FCX released Q3 FY21 reports and reported
  • Significant improvement in net sales and net income.
  • Favourable operational and market outlook.
  • Net income attributable to common stock totalled US$1.08 billion, translating to US$0.73 per share.
• The resurgence of Covid-19 cases with delta variant can create operational difficulties and cause a shortage of labour. Moreover, the demand outlook is uncertain, while US dollar strengthening can impact the precious metal prices as well.
• From a technical standpoint, the current market price is hovering close to the upper Bollinger Band, while 14-day RSI (~58.23) is reiterating the overbought scenario.
• On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book valuation multiples, are overvalued against the Basic Materials industry.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the rapidly spreading Delta variant, overstrained stock prices, gloomy outlook, macroeconomic instabilities, and bearish price trend, we have given a “WATCH” recommendation on Freeport-McMoRan Inc at the closing market price of USD 38.22 (as of 10 August 2021), while we look forward to reviewing how the Company will navigate through the uncertain demand and volatile metal price conditions.

BioNTech SE

BioNTech SE (Nasdaq: BNTX) is involved in next-generation immunotherapy and novel therapies for cancer and other serious diseases.

Investment Highlights – EXPENSIVE at USD 416.50

• On 10 August 2021, BNTX unveiled Q2 FY21 results and reported that
  • It has surpassed the shipping of more than one billion Covid-19 doses, in partnership with Pfizer.
  • Total revenues were estimated to be €5,308.5 million for Q2 FY21, compared to €41.7 million Q2 FY20.
  • Net profit was €2,787.2 million in Q2 FY21 against a net loss of €88.3 million in Q2 FY20.
• The speculations regarding the Federal Reserve reducing its pandemic-era stimulus, can create significant market volatility.
• The recent spike in delta variant can delay the clinical trials and regulatory approvals, which the stock has already topped its 52-week high in this week.
• On 4 August 2021, BNTX completed the acquisition of solid tumor neoantigen T cell receptor R&D platform from Kite, to bolster its cell therapy pipeline.
• From a technical standpoint, the current market price is hovering close to the upper Bollinger Band, while 14-day RSI (~73.25) is reiterating the overbought scenario.
• On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book valuation multiples, are overvalued against the Health Care industry.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

Based on the inconsistent profitability, overvalued valuation multiples, overstretched prices, and macroeconomic uncertainty, we have given an “EXPENSIVE” stance on BioNTech SE at the closing price of USD 416.50 (as on 10 August 2021), while we look forward to reviewing how the Company will deal with new viral variants.

Tempur Sealy International Inc

Tempur Sealy International Inc (NYSE: TPX) designs and manufactures bedding products to improve sleep and overall health and wellness.

Investment Rationale – EXPENSIVE at USD 42.80

• On 29 July 2021, TPX unveiled its Q2 FY21 results for the three months ended 30 June 2021, and reported
  • 76% increase in net sales US$665.2 million in Q2 FY20 to US$1,169.1 million in Q2 FY21.
  • Earnings per diluted share jumped 527.3% year-on-year to US$0.69 in Q2 FY21 from US$0.11 in Q2 FY20.
• On 2 August 2021, TPX acquired Dreams (a specialty bed retailer in the United Kingdom) for vertical integration and omni-channel growth.
• The inflationary market conditions can dampen the consumers’ purchasing power, while the investor sentiments are already impacted with a resurgence in Covid-19 cases and speculations regarding Federal Reserve’s asset tapering.
• From a technical standpoint, the current market price is hovering close to the upper Bollinger Band, while 14-day RSI (~59.79) is reiterating the overbought scenario.
• In the past five quarterly results, TPX reported lower quick ratio and current ratio than the industry median of 1.25x and 1.85x, respectively.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

Based on the overtrained prices, macroeconomic uncertainties, and acquisition risk, we have given an “EXPENSIVE” stance on Tempur Sealy International Inc at the closing price of around USD 42.80 (as on 10 August 2021), while we look forward to monitoring how the Company will navigate through Covid-19 challenges.  

Johnson Controls International PLC

Johnson Controls International PLC (NYSE: JCI) manufacturers and installs HVAC systems, fire and security solutions, and industrial refrigeration systems.

Investment Rationale – EXPENSIVE at USD 72.34

• On 30 July 2021, JCI released Q3 FY21 results and reported
  • 19% year-on-year increase in sales with the 18% growth in organic orders against Q3 FY20.
  • The adjusted earnings per share (EPS) stood at US$0.83, reflecting a 24% year-on-year growth.
  • The FY21 EPS guidance is likely to be in the range of US$2.64 to US$2.66, reflecting year-on-year growth of 18% to 19%.
• The stock price has retested its 52-week high in the last week, while there are significant macroeconomic headwinds related to supply constraints and raw-material price inflation.
• From a technical standpoint, the current market price is hovering close to the upper Bollinger Band, while 14-day RSI (~61.19) is reiterating the overbought scenario.
• In the past five quarterly results, JCI reported lower return on equity than the industry median of 6.4%.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the global supply chain disruptions, bearish price momentum, inflation and regional COVID resurgences, we have given an “EXPENSIVE” recommendation on Johnson Controls International PLC at the closing market price of USD 72.34 (as of 10 August 2021), while we look forward to reviewing how the Company will navigate through ongoing Covid-19 pandemic induced challenges.

Horizon Therapeutics PLC

Horizon Therapeutics PLC (Nasdaq: HZNP) is involved in development and commercialization of medicines, focusing on rare, autoimmune, and severe inflammatory diseases.

Investment Highlights – EXPENSIVE at USD 105.00

• On 4 August 2021, HZNP unveiled its Q2 FY21 results and reported
  • 80% year-on-year increase in net sales, driven by robust demand and record sales of TEPEZZA® (teprotumumab-trbw).
  • The Group is also advancing pipeline to drive long-term growth, and thus, enhanced FY21 guidance.
• The resurgence of Covid-19 cases can lead to supply chain disruption, delay in regulatory approvals, and increase in raw-material costs.
• From a technical standpoint, the current market price is hovering close to the upper Bollinger Band, while 14-day RSI (~63.83) is reiterating the overbought scenario.
• On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book valuation multiples, are overvalued against the pharmaceuticals industry.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

Based on the overvalued valuation multiples, unfavourable technical stance, and macroeconomic uncertainty, we have given an “EXPENSIVE” stance on Horizon Therapeutics PLC at the closing price of USD 105.00 (as on 10 August 2021), while we look forward to reviewing if the Company would be able to sustain the growth and meet its FY21 guidance.

Generac Holdings Inc

Generac Holdings Inc (NYSE: GNRC) designs and manufactures power products and energy technology solutions. Its products are available globally through retailers, distributors, eCommerce partners, and independent dealers.

Investment Highlights – EXPENSIVE at USD 419.09

• On 28 July 2021, Generac reported Q2 FY21 results and unveiled
  • A 68% year-on-year increase in net sales.
  • Subsequently, net income attributable to the Company stood at US$127 million, compared to $66 million in Q2 FY20.
• On 3 August 2021, Generac announced further expansion in Waukesha County with the purchase of a 75,000 square-foot office building.
• Due to rising commodities and significantly higher logistics costs, the Company might fail to achieve its anticipated growth trajectory.
• From a technical standpoint, the MACD line is giving a negative crossover against the signal line, reflecting a bearish price momentum.
• On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book valuation multiples, are overvalued against the Industrials industry.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

Based on the overvalued valuation multiples, unfavourable technical stance, and macroeconomic uncertainty, we have given an “EXPENSIVE” stance on Generac Holdings Inc at the closing price of USD 419.09 (as on 10 August 2021), while we look forward to reviewing how the Company will deal with higher input costs.    

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