Advanced Micro Devices, Inc.

AMD Details

Advanced Micro Devices, Inc. (NASDAQ: AMD) is a semiconductor firm based in the United States. x86 microprocessors (CPUs), accelerated processing units (APUs), discrete graphics processing units (GPUs), semi-custom System-on-Chip (SOC) solutions, and chipsets are among the company's offerings for the PC, gaming, datacenter, and embedded sectors.

Latest News:

• Launch new Products: AMD released the AMD Radeon RX 6600 graphics card on October 13, 2021, to provide visually stunning, high-refresh-rate of 1080p gaming experiences to the midrange market.
• Collaboration with Microsoft: With Windows 11, powered by AMD Ryzen Processors, AMD and Microsoft will enable new user experiences on October 5, 2021, offering the latest features and technologies to enhance performance, efficiency, security features, and connectivity.

H1FY21 Results:

• Robust Growth in Revenues: The company's sales rose 96.21% YoY during H1FY21 (ended June 26, 2021) to USD 7.30 billion from USD 3.72 billion during H1FY20 (ended June 27, 2020), driven by an increase in unit shipments and average selling price.
• Increase in Net Income: The net income for H1FY21 was USD 1.27 billion vs. USD 0.32 million reported in H1FY20.
• Healthy Balance Sheet: As of June 30, 2020, the company's cash and cash equivalents (including short term investments) stood at USD 3.79 billion, with a total debt of USD 313.0 million.

Key Risk: The company's top three customers with the highest accounts receivable balances each accounted for approximately 18%, 17%, and 6% of the total consolidated accounts receivable balance as of FY20 and 15%, 9%, and 8% of the total consolidated accounts receivable balance as of FY19, respectively. Therefore, excessive dependence on a specific customer for income might be detrimental to the company's long-term financial health.

Outlook:

• Q3FY21 Estimate: For Q3FY21, AMD expects its revenues to be in the range of USD 4.1 billion plus minus 100 million, an increase of approximately 46% YoY and about 6% QoQ. It further expects its non-GAAP gross margin to be around 48% in the Q3FY21.
• FY21 Estimate: For FY21, AMD expects its revenue growth of approximately 60%, driven by strong growth across all businesses. It further expects its non-GAAP gross margin to be about 48% for FY21.

Valuation Methodology: Price/Earnings Per Share 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.

AMD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

AMD's share price has surged 52.77% in the past twelve months and is currently trading around the higher-band of the 52-week range of USD 72.50 to USD 122.49. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 75.70, indicating an overbought zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 95.14.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 121.54, up 1.85% as of October 22, 2021, 9:43 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.

Asure Software, Inc.

ASUR Details

Asure Software, Inc. (NASDAQ: ASUR) is a significant supplier of cloud-based Human Capital Management (HCM) solutions, primarily provided as Software-as-a-Service (SaaS) (SaaS). Its HCM package, known as AsureHCM, comprises cloud-based Payroll & Tax, HR, Time & Attendance software, and HR Services ranging from HR projects to fully outsourcing payroll and HR employees. These products and services are also available through its network of reseller partners. As of October 21, 2021, the company's market capitalization stood at USD 173.67 million.

H1FY21 Results:

• Rise in Total Revenue: ASUR reported an 11.82% increase in total revenues to USD 36.97 million during H1FY21 compared to USD 33.06 million during H1FY20 due to increased clients and account balances in funds held for clients and correlated interest revenue.
• Improvement in Net Losses: The company has witnessed an increase in net income to USD 2.17 million during H1FY21 vs. a loss of USD 5.71 million reported during H1FY20.
• Boost in Bookings: Total bookings increased by 48% YoY and 51% sequentially.

Key Risks:

• Dependence on Data Centers: To provide third-party hosted environments for its applications, the company relies on hosted infrastructure partners such as Amazon Web Services (AWS) and, to a lesser extent, Data Center providers. Suppose ASUR is unable to extend these contracts on commercially acceptable terms. In that case, it may be forced to relocate its servers to new data centers, which might result in considerable expenditures and service disruptions, as well as operating losses.
• Supplier Concentration Risk: Some of the essential components utilized in producing its products, such as AsureForce time clocks and air clocks, are sourced from restricted or single suppliers. As a result, any delay in collecting the needed quantity or unfavorable expenses might distort its output, causing severe harm to its overall operating status.

Outlook:

• Revenue Estimate: As of August 9, 2021, the company stated that its revenue for Q3FY21 will be in the range of USD 17.0-17.5 million.
• EBITDA and EPS Estimates: It also expects Non-GAAP EBITDA to be in the range of USD 0.8-1.0 million and Non-GAAP EPS to be in the range of USD (0.03)-(0.01).

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.

ASUR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ASUR's share price has surged 14.97% in the past six months and is currently trading in the higher-band of the 52-week range of USD 6.51 to USD 9.75. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 58.88. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.35.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 9.06, up 0.67% as of October 21, 2021.

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

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

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.