Alteryx, Inc. 

AYX Details

Deeper Integration with Snowflake: Alteryx, Inc. (NYSE: AYX) is an analytics automation company that helps in transforming data into a breakthrough. On 9 June 2021, the company announced deeper integration with Snowflake, the Data Cloud company, to accelerate the development and execution of cloud-based analytic workloads. It is expected that Snowpark Accelerated Program and Snowflake Partner Connect will allow faster data processing and machine learning.

Announced Strategic Alliance with KPMG LLP: On 3^rd June 2021, the company announced a strategic alliance of KPMG LLP to help organizations accelerate data-driven business transformations. Under the alliance, AYX’s data science, analytics and process automation platform will be combined with KPMG technology to speed automation outcomes, modernize tax functions and establish governance and security.

Q1FY21 Result Highlights: For Q1FY21, AYX reported revenue of $118.8 million, up 9% on the previous corresponding period (pcp). Over the quarter, the company added 131 net new customers. GAAP net loss attributable to common stockholders for Q1FY21 stood at $40.7 million. As at 31 March 2021, the company had cash, cash equivalents, and short-term and long-term investments of $1.0 billion.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the risks associated with the impact of the COVID-19 pandemic on its business and global economic conditions. The company’s future results are dependent on its ability to respond to rapid technological change in a timely and cost-effective manner.

Outlook: For Q2FY21, the company expects its revenue to be in the range of $111.0 million to $114.0 million. For the full year FY21, the revenue is expected to be in the range of $565.0 million to $575.0 million. The company expects its Annual Recurring Revenue (ARR) to reach $635.0 million by the end of FY21.

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

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: Over the last six months, the stock has corrected by 33.6% and is trading lower than the average 52-weeks’ price level band of $185.75 and $73.32, offering a decent opportunity for accumulation. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). We have taken a slight premium to its peer average, considering the rise in Q1FY21 revenue, increase in total customers, modest outlook, and also taking into account that the company has been commanding a premium in the past 3-years over its peer median. We have taken peers like Oracle Corp (NYSE: ORCL), Splunk Inc (NASDAQ: SPLK), Datadog Inc (NASDAQ: DDOG). Considering the recently announced deeper integration with Snowflake, strategic alliance with KPMG LLP, rise in total customers, modest outlook, current trading level and valuation, we give a “Buy” rating on the stock at the closing price of $85.52, up by ~0.54% as on 18 June 2021.

AYX Daily Technical Chart, Data Source: REFINITIV 

DXC Technology Company

DXC Details

Appointment of New Executive Vice President: DXC Technology Company (NYSE: DXC) is a leading technology services company that provides services across the Enterprise Technology Stack to deliver new levels of performance, competitiveness, and customer experiences. The company’s Board recently announced the appointment of highly experienced, Brenda Tsai, as Executive Vice President and Chief Marketing and Communications Officer of the company.

Q4FY21 and FY21 Results Highlights: For Q4FY21, the company reported total revenue of $4.385 billion, taking the total FY21 revenue to $17.73 billion, which is 9.4% lower than the previous year. For Q4FY21, the company reported bookings of $4.7 billion and book-to-bill ratio of 1.08x. Over the quarter, the company strengthened its balance sheet by paying down $724 million of debt. EBIT for FY21 stood at $917 million. For FY21, the company reported a net loss of $146 million.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the risks associated with security breaches, cyber-attacks or disclosure of sensitive data or failure to comply with data protection laws and regulations. The company is also exposed to the risks and uncertainties caused by the COVID-19 pandemic and its impact on the global economy, and the impact of current and potential travel restrictions, stay-at-home orders, and economic restrictions implemented to address the crisis.

Outlook: For Q1FY22, the company expects its revenue to be in the range of $4.08 billion - $4.13 billion. For the full year FY22, the revenue is expected to be between $16.6 billion - $16.8 billion. Free cash flow in FY21 is expected to be around ~$500 million.

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

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: Over the last six months, the stock has provided a return of 57.01% and is currently trading above the average 52-week price level band of $41.75 and $14.73. On the technical analysis front, the stock has a support level of ~$31.88 and resistance of $38.39. We have valued the stock using the P/E multiple based illustrative relative valuation method and arrived at a target price with a correction of low single-digit (in % terms). We have taken some discount to its peer average, considering the decline in its FY21 revenue, the occurrence of net loss, and negative ROE.  We have taken peers like International Business Machines Corp (NYSE: IBM), Unisys Corp (NYSE: USI), Xerox Holdings Corp (NYSE: XRX). Considering the stock’s decent performance in the last six months, its current trading levels, uncertainty surrounding the impact of COVID-19 pandemic and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $36.27, down by ~4.27% as on 18 June 2021.

DXC Daily Technical Chart, Data Source: REFINITIV

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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.

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.