Immersion Corporation

IMMR Details

Immersion Corporation (NASDAQ: IMMR) is the world's leading developer of haptics, or touch feedback technology. By delivering technological solutions for mobile, automotive, gaming, and consumer electronics, the firm invents, accelerates, and scales haptic experiences. Mobile devices, wearables, consumer electronics, and gaming devices are all the application targets for the company's software. IMMR operates in Asia, North America, and Europe and earns money via royalties, license payments, development contracts, and service fees.

Latest News:

• Tactical Contracts: IMMR and TITAN Haptics, a Canadian producer of innovative haptic motors for smartphones, consoles, and touchscreen devices, inked a service contract on August 12, 2021, to make IMMR's haptic patent licensing available to mobile phones and wearables.
• License with Stanley: On August 11, 2021, IMMR announced that it had expanded its haptics license with Stanley Electric Co., Ltd., a leading global manufacturer of lighting and electronic components, for use in the automotive industry.

H1FY21 Results:

• Growth in Total Revenue: The firm reported a 52.36% rise in total sales to USD 18.17 million in H1FY21 (ended June 30, 2021) from USD 11.93 million in H1FY20, owing to higher per-unit royalty and licensing fees.
• Increase in Bottomline: Its net income in H1FY21 grew to USD 7.38 million, compared to a loss of USD 5.54 million in H1FY20.
• Healthy Balance Sheet: It has USD 107.27 million in cash and cash equivalents as of June 30, 2021, and no outstanding debt.

Key Risks:

• Customer Concentration Risk: A small number of customers account for a large part of the company's revenue. Samsung, for example, accounted for a significant portion of overall revenues in FY20. This is projected to continue in the foreseeable future, according to IMMR. As a result, if the company loses or reduces income from crucial clients, its operational performance may suffer.
• Shortage of Electronic Components: If the supply of specific electronic components is disrupted for an extended period (as witnessed during the COVID-19 pandemic), the number of royalties payable to the firm may be reduced, worsening its financial situation.

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.

IMMR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

IMMR's share price has declined by 51.24% in the past nine months and is leaning towards the lower band of the 52-week range of USD 6.10 to USD 16.64. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 58.40. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.62.

Considering the correction in the stock price in the past nine months, strong balance sheet, high profit margins, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 7.26, down 1.09% as of October 26, 2021, 11:35 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.

BM Technologies, Inc.

BMTX Details

BM Technologies, Inc. (NYSE: BMTX) delivers digital banking and disbursement services to clients and students across the nation. It operates on the Banking-as-a-Service (BaaS) model, attracting more customers for less money than traditional banks. Interchange and card income, bank servicing fees, account fees, and university fees are the four key sources of revenue.

Latest News:

• Preliminary Q3FY21 Results: BMTX raised its preliminary Q3FY21 revenue and EBITDA projection to USD 22 million and USD 6 million, respectively, on October 13, 2021. BMTX plans to develop its digital banking platform with tailored credit monitoring, identity protection services, execute and deploy a Direct-to-Consumer (D2C) segmentation strategy over the next 6 to 18 months.
• Transition in Leadership: BMTX announced the addition of Li Shen as Chief Accounting Officer (CAO) and Doug Hallett as Director of Enterprise Risk and Audit on September 30, 2021. Shen will collaborate closely with the rest of the leadership team to maintain the accuracy of accounting, financial operations, and external reporting. In addition, Hallett will focus on improving risk infrastructure to serve fintech and bank partners.

H1FY21 Results:

• Improvement in Topline: Total operating revenues increased by 51.58% to USD 47.28 million in H1FY21 (ended June 30, 2021) compared to USD 31.19 million in H1FY20, owing principally to an increase in average deposits and white label project revenues.
• Surge in Net Income: Its net income increased to USD 17.05 million in H1FY21, compared to a net loss of USD 8.65 million in H1FY20.
• Strong Balance Sheet: The company's cash and cash equivalents were USD 19.59 million as of June 30, 2021, with no outstanding debt.

Key Risks:

• Customer Concentration Risk: A white label partner accounted for approximately 28% and 63% of accounts receivable (including unbilled receivables) on June 30, 2021, and December 31, 2020, respectively. As a result, putting too much reliance on specific clients may damage a company's long-term financial sustainability.
• Regulatory Risk: BMTX's banking partners are subject to the same level of regulatory scrutiny as the banking industry as a whole. As a financial service provider, the company must abide by these restrictions, which are costly and ban some practices, such as interest rates imposed on loans and interest rates paid on deposits.

Outlook:

• Revenue Estimate: BMTX forecasts FY21 revenues to be around USD 92 million as of October 13, 2021, up roughly 37% from FY20.
• EBITDA Estimate: It also forecasts core EBITDA of over USD 24.0 million in FY21, reflecting a 535% growth over FY20.

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.

BMTX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

BMTX stock has declined 46.65% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 7.68 to USD 18.35. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 44.79. We have valued the stock using the Price/Earnings multiple-based relative valuation methodology and arrived at a target price of USD 10.16.

Considering the correction in the stock price, surge in FY21 outlook, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 8.35, up 1.71% as of October 26, 2021, at 12:47 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.    

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.