Apple Inc.

AAPL Details

Introduction of Apple TV 4K: Apple Inc. (NASDAQ: AAPL) is a technology company that designs, develops, and sells consumer electronics, computer software, etc. The market capitalization of the company as on 22 April 2021 stood at ~$2,287.48 billion. As per a recent report, the company has unveiled the next generation of Apple TV 4K, which delivers high frame rate HDR with Dolby Vision. The quality performance is delivered by a A12 Bionic chip that enhances graphics performance, video decoding, and audio processing.

Apple Podcasts Subscriptions: Apple has recently disclosed its Apple Podcasts Subscriptions on 20 April 2021. It is a global marketplace for listeners to discover premium subscriptions along with other free shows.

Q1FY21 Results Update: During the quarter, the company reported record revenues of $111.4 billion, an increase of ~21% on the pcp. The operating cash flow stood at $38.8 billion during the period. It delivered a net income of $28.75 billion in Q1FY21, compared to income of $22.23 billion in the previous corresponding period.

Q1FY21 Performance (Source: Company Reports)

Outlook: The company is expected to announce its Q2FY21 results on 29 April 2021. With the increased product launches and innovations, the company will look for sustained performance going forward.

Key Risks: AAPL is a global company and has operations across the globe. As such, it is exposed to change in foreign currency risk. 

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

Data Source: Refinitiv, Thomson Reuters, 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: The stock of AAPL is trading above its average 52-weeks’ levels of $145.09-$68.05. The stock of AAPL gave a positive return of ~13.98% in the past six months and a positive return of ~7.67% in the past one month. On a technical analysis front, the stock of AAPL has a support level of ~$118.94 and a resistance level of ~$138.880. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price of high single-digit upside (in % terms). We believe that the company can trade at some premium to its peer average EV/Sales (NTM Trading multiple), considering the robust financial performance and the popularity of the product among the masses. For the purpose, we have taken peers such as Microsoft Corp (NASDAQ: MSFT), Motorola Solutions Inc (NYSE: MSI), Qualcomm Inc (NASDAQ: QCOM), to name a few. Considering the expected upside in valuation and current trading levels, record financial performance and unveiling of new products, we recommend a ‘Hold’ rating on the stock at the closing price of $131.940, down by ~1.17% as on April 22, 2021.

AAPL Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

BigCommerce Holdings, Inc.

BIGC Details

Named as Preferred E-commerce Partner: BigCommerce Holdings, Inc. (NASDAQ: BIGC) is a software-as-a-service (SaaS) e-commerce platform that enables merchants to grow their business online. The market capitalization of the company as on 22 April 2021 stood at ~$3.99 billion. As per a recent update, Gooten has named BigCommerce as its first eCommerce Preferred Partner. The partnership will provide Gooten’s online merchants with one-step integration with the help of the SaaS platform. As part of the deal, over 60,000 BigCommerce customers will have access to Gooten’s manufacturing supply chain.

Chargebee’s Integration with BigCommerce: On 31 March 2021, Chargebee, which is a subscription management platform, has integrated with BigCommerce. Through this integration merchants using the BigCommerce platform will be able to take advantage of Chargebee’s subscription features and enhance recurring revenue streams.

Q4FY20 Performance Update: During the period, the company reported impressive performance with an increase in revenue by ~39% to $43.1 million when compared to the previous corresponding period. The total annual revenue run-rate grew by ~41% to $181.2 million as of 31 December 2020. It reported adjusted EBITDA at negative $6.8 million during the period, compared to negative $8.1 million in the pcp, aided by improvement in the high margin PSR and managing spends effectively.

Q4FY20 Financial Performance (Source: Company Reports)

Outlook: The company has reported that it will announce its Q1FY21 results on 11 May 2021. It expects total revenue to be between $41.8 million and $42.3 million in Q1FY21, and non-GAAP operating loss to be between negative $8.2 million and negative $7.9 million. It also anticipates the full year FY21 revenue to be between $189 million and $191 million, and non-GAAP operating loss to be between negative $34.5 million and negative $33.3 million

Key Risks: The company operates in a sector that is very much exposed to cyber threats and security breaches, which might lead to business disruptions and have an impact on its profitability.

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

Data Source: Refinitiv, Thomson Reuters, 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:  The company has reported an improvement in the cash position to $219.4 million as of 31 December 2020. The stock of BIGC is trading below its average 52-weeks’ levels of $162.50-$50.59. The stock of BIGC gave a negative return of ~23.40% in the past three months and a negative return of ~2.04% in the past one month. On a technical analysis front, the stock of BIGC has a support level of ~$50.59 and a resistance level of ~$61.08. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the improved financial performance, net cash position and optimistic revenue guidance. For the purpose, we have taken peers such as HubSpot Inc (NASDAQ: HUBS), Shopify Inc (NASDAQ: SHOP), Anaplan Inc (NASDAQ: PLAN), to name a few. Considering the expected upside in valuation and current trading levels, decent financial performance, key strategic partnerships and comfortable cash position, we recommend a ‘Buy’ rating on the stock at the closing price of $54.630, up by ~3.41% as on April 22, 2021.

BIGC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Note: 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.