Teradyne, Inc.

TER Details

Teradyne, Inc. (NASDAQ: TER) is a primary global test and industrial automation equipment provider. It creates, manufactures, and sells automated test systems for semiconductors, wireless devices, data storage, and complex electronics systems in various sectors, including consumer electronics, wireless, automotive, industrial, computer, communications, and aerospace and military.  As of October 20, 2021, the company's market capitalization stood at USD 19.29 billion.

Latest News:

• Enhancing Partnership to add Value: LitePoint, a wholly-owned subsidiary of TER, announced a partnership with Microchip Technology Inc., a leading provider of Bluetooth and Wi-Fi Integrated Circuits, to deliver simplified design validation and turnkey manufacturing test solutions for next-generation Internet of Things (IoT) systems based on Microchip's Bluetooth and Wi-Fi chipsets, on October 13, 2021.
• Transition in Management: LitePoint, a wholly-owned subsidiary of TER, announced on September 28, 2021, that Anna Smith had joined the company to manage global sales. Smith has over 20 years of expertise in the semiconductor business and has a proven track record of driving sales growth.

H1FY21 Results:

• Robust Growth in Revenues: The company's sales rose 21.02% YoY during H1FY21 (ended July 04, 2021) to USD 1.87 billion from USD 1.54 billion during H1FY20, driven by an increase in sales in both products and services segments.
• Increase in Net Income: The net income for H1FY21 was USD 533.83 million vs. USD 365.10 million reported in H1FY20.
• Healthy Balance Sheet: As of June 30, 2020, the company's cash and cash equivalents (including marketable securities) stood at USD 1.24 billion, with a total debt of USD 357.38 million.
  

Key Risks:

• Customer Concentration Risk: The company's five largest direct clients contributed 36%, 27%, and 27% of consolidated revenues in each of the years FY20, FY19, and FY18, respectively. Therefore, excessive dependence on a specific customer for income might be detrimental to the company's long-term financial health.
• Shortage of Raw Material: Because of strong industry demand or some suppliers' failure to consistently satisfy quality or delivery standards, some components, such as semiconductor chips, may be in low supply from time to time. If one of the business's suppliers cancels contracts or fails to satisfy product quality criteria, the company risks losing time-sensitive client orders, resulting in a financial downturn.

Outlook: As of July 27, 2021, TER expects its Q3FY21 revenues to be in the range of USD 880-960 million. It further expects its GAAP net income of USD 1.17-1.41 per diluted share and non-GAAP net income of USD 1.29-1.55 per diluted share.

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.

TER Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: TER's share price has surged 32.99% in the past twelve months and is currently trading around the mid-band of the 52-week range of USD 85.00 to USD 147.90. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 56.97. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 135.76.

Considering the company's growth prospects, improvement in financial performance, steady dividends, recent partnerships associated risk, and current valuation, we recommend a "Hold" rating on the stock at the closing price of USD 116.952, up 0.20% as of October 20, 2021.

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

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

Graco Inc.

GGG Details

Graco Inc. (NYSE: GGG) producer, marketer, and designer of systems and equipment for moving, measuring, controlling, dispensing, and spraying fluid and powder materials in industrial and commercial markets. In Q3FY21, the US accounted for 50.15% of GGG's total revenue. As of October 20, 2021, the company's market capitalization stood at USD 12.39 billion.

Latest News:

• Recent Product Launches: On October 06, 2021, GGG launched EGPTM electric transfer and on-demand pumps as a replacement for obsolete APEX pumps. EGP models offer improved pump designs, new motors, built-in filtration, and new pressure controls for on-demand models.

• Payment of Dividend: On September 17, 2021, GGG declared a quarterly dividend of USD 0.19 per common share, payable on November 03, 2021, to shareholders of record on October 18, 2021.

Q3FY21 Results:

• Growth in Revenue: The company reported a YoY growth of 10.78% in revenues to USD 486.70 million during Q3FY21 (ended September 24, 2021) from USD 439.32 million during Q3FY20 (ended September 25, 2021), driven by 22.12% YoY increase in revenue from Industrial segment.
• Decline in Net Profits: GGG reported a decline in net income to USD 103.83 million during Q3FY21 vs. USD 114.12 million in Q3FY20.
• Cash and Debt Position: As of September 24, 2021, the company had cash and cash equivalents of USD 603.83 million and total debt of USD 200.32 million.

Key Risks:

• Exchange Rate Fluctuation Risk:85% of GGG’s revenue was in currencies other than USD in Q3FY21, thus exposing GGG to exchange rate fluctuations.
• Customer Concentration Risk: In FY20, GGG derived majority of its contract segments revenue from limited number of large customers. The loss of any of these key customers could hurt the company’s financials.

Outlook:

• Revenue Growth: In % terms, GGG expects the organic sales growth of mid-to-high teen on a constant currency basis in FY21.

Valuation Methodology: Price/Earnings 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.

GGG Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

GGG's stock price declined 5.24% in the past six months and is currently trading close to the mid-band of the 52-week range of USD 60.65 to USD 80.48. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 54.49. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 80.77.

Considering the company's growth prospects, solid margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 73.02, as of October 20, 2021.

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

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

Co-Diagnostics, Inc.

CODX Details

Co-Diagnostics, Inc. (NASDAQ: CODX) develops, manufactures, and sells reagents for diagnostic tests that employ nucleic acid molecules (DNA or RNA) for detection and analysis. Sales of products and licenses generate revenue for the company. By increasing genetic material detection, CODX's patented molecular diagnostics technology is opening the path for disease diagnosis and life sciences research innovation. As of October 20, 2021, the company's market capitalization stood at USD 249.03 million.

Latest News:

• Receives Clearance from Regulators: CODX announced on October 6, 2021, that CoSara Diagnostics Pvt. Ltd., its joint venture for production and sales in India, has gained approval from the Central Drugs Standard Control Organization (CDSCO) to produce and market its Saragene Dengue and Chikungunya Multiplex RT-PCR test as an in vitro diagnostic (IVD) in India.
• Introducing New Products: CODX stated in a press conference on September 27, 2021, that it would unveil its forthcoming at-home and point-of-care PCR equipment at the 2021 AACC Annual Scientific Meeting & Clinical Lab Expo, which will be held September 26-30 in Atlanta, GA. It will also have a stand there to advertise its current diagnostics and technological applications.

H1FY21 Results:

• Robust Growth in Revenues: The company's sales rose 85.17% YoY during H1FY21 (ended June 30, 2021) to USD 47.38 million from USD 25.59 million during H1FY20, due to sales of its LogixSmart COVID-19 test.
• Increase in Net Income: The net income for H1FY21 was USD 17.68 million vs. USD 13.94 million reported in H1FY20.
• Healthy Balance Sheet: As of June 30, 2020, the company's cash and cash equivalents (including investments in marketable securities) stood at USD 72.38 million with no outstanding debt.

Key Risks:

• Customer Concentration Risk: In Q2FY21, the company's top two clients contributed around 67% of total revenues. However, excessive dependence on a specific customer for income might be detrimental to the company's long-term financial health.
• Limited operating History: The company started operations in April 2013 and had a few years of experience. However, in FY20, it became profitable. Furthermore, due to the start-up nature of the firm, it is likely to continue to incur significant operating expenses. As a result, it may not be able to generate adequate revenues to pay costs.
  

Outlook: CDOX forecasts sales of USD 23-25 million in Q3FY21, as well as higher development costs for its Eikon point-of-care technology platform. It also estimates its diluted EPS to be in the USD 0.19-0.22 range, with about 30 million shares outstanding and a corporate effective tax rate of around 19.0%

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.

CODX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CODX's share price has declined 35.19% in the past twelve months and is currently leaning towards the lower-band of the 52-week range of USD 7.01 to USD 20.69. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 39.44. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 10.44.

Considering the company's growth prospects, improvement in financial performance, regulatory clearance, associated risk, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 8.62, down 0.94% as of October 20, 2021.

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

* All forecasted figures and industry 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.

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.