Vertex Pharmaceuticals Incorporated

VRTX Details

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is a multinational biotechnology firm focused on discovering and developing small-molecule drugs to treat severe disorders, with a primary focus on Cystic Fibrosis (CF), a life-threatening genetic condition. TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO are its marketed medicines, which have been authorized to treat approximately 83,000 individuals living with CF in North America, Europe, and Australia. It also focuses on other severe illnesses like AAT deficiency, APOL1-mediated renal disorders, and pain, in addition to CF. As of September 30, 2021, the company's market capitalization stood at USD 47.27 billion.

Healthy Product Pipeline (Source: Q2FY21 Earnings Presentation, July 29, 2021)

Publication of Phase 3 Results for TRIKAFTA: VRTX announced that the findings from a Phase 3 trial of TRIKAFTA in patients with CF aged 12 years and older were published in The New England Journal of Medicine (NEJM) on August 26, 2021. The paper includes the data on primary and critical secondary outcomes that demonstrated statistically significant and clinically relevant improvements in lung function and sweat chloride, are included in the paper.

New Partnership with Arbor: VRTX announced a new association with Arbor Biotechnologies (Arbor), an early-stage life sciences company, on August 24, 2021, to improve efforts in creating ex vivo engineered cell treatments by utilizing Arbor's patented CRISPR gene-editing technology. This new partnership adds to the company's cell and genetic treatments portfolio and furthers its work on identifying and developing cell therapies for treating various severe disorders.

H1FY21 Results: The company reported a 15.73% increase in total revenues to USD 3.52 billion during H1FY21 (ended June 30, 2021) compared to USD 3.04 billion during H1FY20, primarily due to the uptake of KAFTRIO, which was approved in Europe in Q3FY20, and the continued performance of TRIKAFTA in the US. However, its net income for H1FY21 declined to USD 720.06 million from USD 1.44 billion reported in H1FY20 due to a significant increase in R&D expenses. As of June 30, 2021, the company had cash and cash equivalents (including marketable securities) of USD 6.71 billion, with total debt amounting to USD 524.93 million.

Key Risks: The firm sells its medicines to a limited group of specialty pharmacies and specialty distributors in the US. It primarily sells its goods to a small number of specialist distributors, retail chains, hospitals, and clinics globally. Such over-reliance on a small number of customers might be detrimental to the company's financial health in the long run.

Outlook:

FY21 Outlook (Source: Q2FY21 Earnings Presentation, July 29, 2021)

Valuation Methodology: EV/EBITDA 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.

VRTX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VRTX's share price has fallen 33.34% in the past twelve months and is currently leaning close to the lower-band of the 52-week range of USD 180.02 to USD 280.99. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 31.01. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 223.75. Considering the company's leadership in CF, strong profit margins, new partnerships, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 181.39, down 0.46% as of September 30, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The report has been partly sourced from REFINITIV.

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

SSR Mining Inc.

SSRM Details

SSR Mining Inc. (NASDAQ: SSRM) is a precious metals mining company with four operating properties, namely, Çöpler Gold Mine (Turkey), Marigold Mine (USA), Seabee Gold Operation (Canada), and Puna Operations (Argentina). It is engaged in the discovery, extraction, processing, reclamation, and other related operations and primarily produces gold, silver, lead, and zinc concentrates. As of September 30, 2021, the company's market capitalization stood at USD 3.08 billion.

Positive Drilling Results: SSRM announced favorable readings from 127 drill holes at its Seabee mine and neighboring targets in Saskatchewan, Canada, on September 13, 2021. It also stated that it is actively exploring prominent land positions surrounding its existing operating mines in Turkey, Canada, and the US to leverage its infrastructure and pursue low-cost brownfield development targets.

Moreover, SSRM also reported on August 18, 2021, that 194 diamond drill holes for Çakmaktepe Extension Project (Ardich) in the Çöpler District yielded promising findings between March 2020 and May 2021. These results add to the preliminary economic analysis (PEA) reported in November 2020, which stated that the project holds the potential for roughly 1.1 million ounces of gold output over an 11-year mine life, with development capital expenditures of ~USD 50 million.

Robust H1FY21 Results: The company reported a sharp uptick of 1.89x YoY in revenue to USD 743.43 million during H1FY21 (ended June 30, 2021) compared to USD 256.95 million during H1FY20, due to a drawdown in finished goods inventory balances. As a result, its net income in H1FY21 increased significantly to USD 111.37 million from USD 17.70 million reported in H1FY20. As of June 30, 2021, the company had cash and cash equivalents (including marketable securities) of USD 891.11 million, with total debt amounting to USD 475.09 million.

Key Risks: Gold, silver, and base metal prices fluctuate considerably on the global market, putting enterprises in danger of losing money and resulting in mineral property impairments. As a result, the company's financial situation could be impacted by any adverse price movements. In addition, metals mining requires several permits from the federal and local governments. Hence, tighter limitations or non-compliance with necessary regulations could harm SSRM's profitability.

Outlook:

FY21 Outlook (Source: Q2FY21 Results Presentation, August 2021)

Valuation Methodology: EV / EBITDA 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.

SSRM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: SSRM's stock price fell 27.65% in the past nine months and is currently leaning towards the lower band of its 52-week range of USD 13.68 to USD 21.80. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 38.34. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 17.85 Considering the significant correction in the stock price, steady dividend yield, new exploration projects, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 14.55, up 2.25%, as of September 30, 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.