AT&T Inc.

T Details

AT&T Inc. (NYSE: T) is a holding company with subsidiaries and affiliates globally in the telecommunications, media, and technology industries. Its operating segments are 1) Communications, which comprises the Mobility, Business, and Consumer Wireline business areas in the United States and worldwide, 2) WarnerMedia, which is a multinational entertainment company that creates and distributes films, television shows, video games, and other content in both physical and digital formats and 3) Latin America, which offers entertainment and wireless services in Latin America and the Caribbean (under Vrio) and Mexico.

Latest News:

• Network Capabilities: AT&T has achieved its first milestone in demonstrating the potential of its 5G network solution by enabling "smart warehouse" applications for the Department of Defense's Naval Base Coronado in San Diego. Using its 5G spectrum and a private 5G Core and Radio Access Network (RAN), AT&T's 5G network solution achieved data throughput speeds greater than 4 gigabits per second with less than 10 milliseconds of latency. This performance was demonstrated using commercially accessible commodity mobile devices at a testbed facility in Richardson, Texas.
• Spin off of WarnerMedia: AT&T, Inc. stated on February 1, 2022, that its board of directors has decided to spin off AT&T's stake in WarnerMedia as part of the previously announced transaction with Discovery, Inc. The transaction is expected to close in Q2FY22, with AT&T's interest in WarnerMedia being spun off to AT&T's existing shareholders in a pro-rata distribution, followed by the merger of WarnerMedia and Discovery.
• Sale of Xander: Microsoft has agreed to buy AT&T Inc.'s global programmatic advertising platform, Xandr Inc.  The agreement builds on a decade of collaboration between Xandr and Microsoft, including its predecessor companies, to provide global digital media solutions for advertisers.
• Dividend Declaration: On December 16, 2021, the company declared a quarterly dividend of USD 0.52 per common share, paid on February 01, 2022, to shareholders of record on January 10, 2022.

FY21 Results:

• Slight Decline in Revenues: Total operating revenues decreased 1.69% to USD 168.86 billion during FY21 (ended December 31, 2021) from USD 171.76 billion during FY20, due to disinvestment in the US Video and other businesses partially offset by growth in revenue in WarnerMedia and Communication segment.
• Surge in Bottom Line: T reported a net income of USD 19.87 billion in FY21 compared to a net loss of USD 5.37 billion in FY20.
• Cash and Debt Position: As of December 31, 2021, the company's cash and cash equivalents stood at USD 21.17 billion, with a total debt of USD 178.70 billion.

Key Risks:

• Spectrum Risk: The capacity of WarnerMedia to distribute linear network feeds of its domestic cable networks to its affiliates could be jeopardized if the Federal Communications Commission (FCC) modifies the electromagnetic spectrum currently used for broadcast television and satellite distribution.

Outlook:

2022 Financial Outlook (Source: Investor Update Presentation, January 26, 2022) 

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

AT&T's share price has fallen 23.95% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 22.02 to USD 33.88. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 29.28.

Considering the company's market dominance, robust dividend yield, demonstrated 5G capability, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 24.345, down 4.53% as of February 01, 2022, 01:07 PM ET.

Three-Year Technical Price Chart (as on February 01, 2022, at 01:07 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

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 unfavorable movement in the stock prices.

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.

Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a global innovator and leader in high-performance gaming, streaming, and video creation equipment. It develops industry-leading gaming and streaming equipment that allows producers to make studio-quality content to enjoy with friends or broadcast to millions of viewers. The company's two proprietary software platforms, iCUE for games and Elgato for video artists, allow for easy performance and customization across their respective product lines.

Latest News:

• Strategic Investment: On January 5, 2022, CRSR announced that it had acquired a 51% stake in iDisplay Technology (iDisplay), a leader in electrical development and design with a focus on display technology. CRSR and iDisplay aim to create and design several essential products through this collaboration.
• Latest Launch: On January 4, 2022, CRSR introduced the new CRSR ONE i300 series of lightweight desktop PCs, the compact addition to its ONE family. Starting with the Intel Core i9-12900K, this powerful system uses the latest Intel Core processors from the 12th generation. The ONE i300 is a full-featured gaming PC smaller than a laptop and takes up less desk space.

Q3FY21 Results:

• Decline in Topline: The company reported a YoY 14.43% decline in overall revenue to USD 391.12 million in Q3FY21 (ended September 30, 2021) from USD 457.10 million in Q3FY20, attributable to COVID-19 pandemic's supply and logistical constraints, as well as a scarcity of competitively priced graphics processing units (GPUs).
• Reduction in Profitability: In Q3FY21, CRSR's net income dropped to USD 1.78 million from USD 36.36 million in Q3FY20.
• Cash and Debt Position: The company had USD 71.92 million in cash and cash equivalents as of September 30, 2021, and total debt of USD 248.84 million.

Key Risk:

• Geographic Concentration Risk: Revenues from sales to customers in the United States were 41.4% in Q3FY21 and 39.6% in Q3FY20, respectively. As a result, losing any of these critical clients could harm the company's bottom line.

Outlook:

• FY21 Guidance: As of Q3FY21, CRSR expects FY21 net sales to be about USD 1.825-1.925 billion, with adjusted EBITDA of USD 190-205 million. The adjusted operating income is expected to range between USD 180 and USD 195 million.

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. 

Stock Recommendation:

CRSR's stock price has fallen 38.36% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 17.68 to USD 48.30. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 24.21.

Considering the significant correction in the stock price, inorganic growth initiatives, innovative product launches, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 20.09, up 2.81% as of February 01, 2022, at 11:09 AM ET.

Three-Year Technical Price Chart (as on February 01, 2022, at 11:09 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

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.

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.

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.