Zimmer Biomet Holdings, Inc,

ZBH Details

Zimmer Biomet Holdings, Inc. (NYSE: ZBH) is a company that develops, manufactures, and sells orthopedic reconstructive products such as sports medicine, biologics, extremities and trauma treatments, and other similar items. Knees and Hips are the two categories in which the company's products are categorized.

Latest News:

• Redemption of Senior Notes: On November 30, 2021, ZBH priced its cash tender offer (initially announced on November 15, 2021) to buy back its outstanding 3.700% Senior Notes Due 2023, USD 1.5 billion aggregate purchase price of its 3.550% Senior Notes due 2025, 3.550% Senior Notes due 2030, 4.450% Senior Notes due 2045, 3.050% Senior Notes due 2026, 4.250% Senior Notes due 2035 and 5.750% Senior Notes due 2039. The Tender Offers are intended to reduce the outstanding principal amount of the company's debt securities. The securities acquired through the Tender Offers will be retired and cancelled. The noteholders, who validly tendered their notes (and which tenders are accepted for purchase) on November 29, 2021, will now receive total consideration of USD 1,009.64 (including an early tender premium) per USD 1,000 principal amount. The offer expired on December 13, 2021.
• Payment of Dividend: On November 16, 2021, the company declared a quarterly dividend of USD 0.24 per common share, payable on January 31, 2022, to shareholders of record on December 28, 2021.

Q3FY21 Results:

• Flat Topline: The company witnessed a YoY decline of 0.27% in net sales to USD 1.92 billion in Q3FY21 (ended September 30, 2021) from USD 1.93 billion in Q3FY20.
• Decline in Bottom-Line: Net income for Q3FY21 reduced 39.96% YoY and stood at USD 145.6 million compared to USD 242.5 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company's cash balance stood at USD 919.60 million, with a total debt of USD 7.50 billion.

Key Risks:

• Dependence on Third-Party Payers: ZBH sells its products and services to hospitals, doctors, and other healthcare providers reimbursed by third-party payors such as domestic and international government programs, private insurance plans, and managed care programs for the services they deliver to their patients. As a result, if third-party payors in government healthcare systems refuse to compensate customers or cut payment levels, demand for ZBH's products may fall, putting the company's financials at risk.

Outlook:

• FY21 Estimates: ZBH expects sales growth of 11.3-12.5% YoY in FY21, with an adjusted operating profit margin of 26-26.5%.

Financial Guidance (Source: Q3FY21 Earnings Release, November 04, 2021) 

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.

ZBH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ZBH' share price has fallen 24.19% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 116.60 to USD 180.36. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 52.31. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 159.78.

Considering the significant correction in the stock price, strong track record, debt reduction efforts, steady dividend yield, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 128.50, down 0.33% as of January 07, 2022, 01:08 PM ET.

* 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. 

Roku, Inc.

ROKU Details

Roku, Inc. (NASDAQ: ROKU) is a TV streaming platform, and its website allows users to explore and access a wide choice of movies and TV episodes and live sports, music, news, and more. Advertising, content distribution, audience building, and billing services produce platform revenue while selling streaming players and audio items generates player revenue.

Latest News:

• Highest Selling Smart TV Operating System: On January 03, 2022, ROKU announced that according to NPD's Weekly Retail Tracking Service, the Roku Operating System (OS) was the No. 1 smart TV OS sold in the United States for the second year in a row, based on available data from January 03, 2021, through December 4, 2021.
• Partner Adoption and International Expansion: On 29 December 2021, the company announced that the Roku TV Ready Certification program had grown and expanded internationally. Element, JVC, Pheanoo, and Philips are among the new Roku TV Ready partners in 2021, with Polk Audio and Westinghouse joining in early 2022. These companies join an existing list of Roku TV Ready partners that includes Bose, Hisense, TCL North America, and Sound United, the parent company of Denon, Definitive Technology, and Polk Audio. The initiative was also expanded globally, with new partners starting in the UK, Canada, and Mexico.

Q3FY21 Results:

• Sharp-Uptick in Topline: The company witnessed YoY growth of 50.54% in total net revenue to USD 679.95 million in Q3FY21 (ended September 30, 2021) compared to USD 451.66 million in Q3FY20.
• Surge in Profitability: Net income for Q3FY21 increased 432.44% YoY and stood at USD 68.94 million vs. USD 12.95 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company's cash balance stood at USD 2.18 billion, with a total debt of USD 91.09 million.
• Improvement in ARPU: ROKU's average revenue per user (ARPU) increased to USD 40.10 as of September 30, 2021, up from USD 27.00 as of September 30, 2020.

Key Risks:

• Seasonality Risk: Due to more lavish consumer spending and more advertising during the holiday seasons, ROKU's sales and gross profit are frequently most impressive in the fourth quarter of each fiscal year, accounting for a significant share of the entire net income that fiscal year. Therefore, any failure in expected fourth-quarter sales, whether due to a reduction in the effectiveness of its promotional operations, supply chain disruptions, or other factors, would substantially influence its full-year performance.

Outlook:

• Q4FY21 Estimates: ROKU forecasts to generate revenue of USD 885 – 900 million in Q4FY21, along with a gross profit in the range of USD 380 – 390 million.

Q4FY21 Guidance (Source: Q3FY21 Shareholder Letter, November 03, 2021) 

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.

ROKU Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ROKU share price has fallen 57.16% in the past six months and made a new 52 week low today. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 31.85. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 215.83.

Considering the significant correction in the stock price in the past six months, strong balance sheet, high profitability margins, recent launches, and current valuation, we recommend a " Buy" rating on the stock at the current price of USD 180.05, down 7.11% as of January 07, 2022, 11:00 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.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

UiPath, Inc.

PATH Details

UiPath, Inc. (NYSE: PATH) develops an end-to-end platform for automation that includes user emulation. Its platform is designed to be utilized by employees within an organization and to solve various use cases, ranging from simple tasks to long-running, complicated business processes. It makes money by selling licenses to its proprietary software, maintaining and supporting those licenses, granting access to certain products (software as a service, or SaaS), and providing additional services, such as professional services. The company's ordinary shares were listed on the NYSE on April 21, 2021, at an issue price of USD 56.00 per share.

Latest News:

• Prolonged Partnership with Accenture: PATH and Accenture, a worldwide professional services firm, announced an expanded business relationship on December 8, 2021, to help clients accelerate enterprise-wide automation adoption, expedite technological transformation efforts, and generate new growth prospects. Previously on December 06, 2021, PATH and Qlik, a private SaaS firm, announced their collaboration and the launch of direct integration between Qlik Cloud analytics and the PATH end-to-end enterprise automation software platform.

Q3FY22 Results:

• Rise in Revenues: The company reported an increase of 49.92% in total revenue to USD 220.82 million in Q3FY22 (ended October 31, 2021) compared to USD 147.29 million in Q3FY21, due to an increase in sales across all segments.
• Sharp Uptick in ARR: PATH's annualized renewal run-rate (ARR) witnessed a growth of 57.87% to USD 818.41 million in Q3FY22 from USD 518.40 million in Q3FY21.
• Increase in Losses: PATH reported an increase in net losses to USD 122.79 million in Q3FY22 from USD 70.80 million in Q3FY21 due to the rise in operating expenses.
• Strong Balance Sheet: As of October 31, 2021, the company had cash and cash equivalents (including short-term investments) of USD 1.88 billion and no outstanding debt.

Key Risks:

• Customer Concentration Risk: A significant part of the company's revenue and ARR comes from sales to its top 10% customers. Any of the company's main clients could elect to purchase less than they have in the past or decide not to license its platform and products, resulting in a drop in revenue and ARR and a negative impact on the company's operations.

Outlook:

• Q4FY22 Estimates: As of December 08, 2021, PATH estimates Q2FY22 ARR to be in the range of USD 901 – 903 million, with revenue of roughly USD 281-283 million.  Non-GAAP operating income is expected to be in the range of USD 10-20 million.
  

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.

PATH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

PATH's stock price has fallen 43.50% in the past six months and is leaning towards the lower band of its 52-week range of USD 37.80 to USD 90.00. The stock is currently trading below its 50 DMA level, and its RSI Index is at 34.89. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 48.64.

Considering the company's growth prospects, a surge in ARR, strong top-line performance, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 38.70, down 2.30% as of January 07, 2022, 11:05 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.

* 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.