AT&T Inc.

T Details

AT&T Inc. (NYSE: T) is a holding company that, via its subsidiaries and affiliates, engages in the telecommunications, media, and technology industries across the world. Its business segments are: 1) Communications, which includes the Mobility, Business, and Consumer Wireline business units in the United States and globally; 2) WarnerMedia, which produces and distributes films, television, gaming, and other content in both physical and digital formats worldwide; and 3) Latin America, which provides entertainment and wireless services in Latin America and the Caribbean (under Vrio) and Mexico.

Disposal of Playdemic: On September 20, 2021, the company closed the sale of Playdemic, Ltd. (a division of Warner Bros. Games), a leading mobile gaming firm, to Electronic Arts, a global leader in digital entertainment, for USD 1.4 billion in an all-cash deal, subject to usual purchase price adjustments.

Partnership with Overland-Tandberg: Overland-Tandberg, a worldwide provider of technology products and services, announced a partnership with AT&T on September 16, 2021, to launch its first Connected Learning Center, aimed at increasing family access to educational and digital literacy resources. AT&T aims to open more than 20 Connected Learning Centers in local community groups.

H1FY21 Results: The company reported a 5.08% increase in total operating revenues to USD 87.98 billion during H1FY21 (ended June 30, 2021) compared to USD 83.73 billion during H1FY20, mainly due to an increase in revenues from the Communications and WarnerMedia segments. In addition, AT&T reported an increase in net income (attributable to common stockholders) to USD 9.01 billion during H1FY21 vs. USD 5.81 billion reported in H1FY20. As of June 30, 2021, it had cash and cash equivalents of USD 11.87 billion, with total debt amounting to USD 179.78 billion.

On September 23, 2021, AT&T declared a quarterly dividend of USD 0.52 per common share, payable on November 01, 2021, to shareholders of record on October 11, 2021. The company has been consistently paying dividends over the last five years, as depicted in the chart below (every D represents a dividend payment):

Steady Dividend Yield (Source: REFINITIV)

Key Risks: Any potential changes by the Federal Communications Commission (FCC) to the electromagnetic spectrum currently used for broadcast television and satellite distribution could hurt WarnerMedia's ability to deliver linear network feeds of its domestic cable networks to its affiliates, putting its financial strength and cash flows at risk.

Outlook:

FY21 Guidance (Source: Investor Update, July 22, 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.

T Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AT&T's share price has fallen 9.78% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 26.35 to USD 33.88. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 52.37. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 33.32. Considering the company's market dominance, robust dividend yield, strategic disposals, new partnerships, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 27.57, up 1.62% as of September 27, 2021, 12:58 PM ET.

*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.

Uber Technologies, Inc.

UBER Details

Uber Technologies, Inc. (NYSE: UBER) is a technology-based platform provider of cab, food delivery, and transportation services. UBER operates on a proprietary platform that enables a wide range of services and solutions. UBER's platform is available in roughly 10,000 cities across 71 countries as of June 30, 2021. The company generates its revenue through three divisions, namely, 1) Mobility revenues, generated from fees paid by mobility drivers for using the company's platform; 2) Delivery revenues, comprising fees paid by merchants and delivery people for using the company's delivery platform; and 3) Freight revenues, for transportation services provided to shippers.

New Partnerships: On September 24, 2021, Bartell Drugs, a pharmacy supplier, announced a collaboration with UBER to distribute Bartell's goods via Uber Eats in the Puget Sound region in Washington. Due to this collaboration, customers can order critical healthcare and grocery goods and have them delivered to their homes quickly. This collaboration was launched concurrently with the announcement of a partnership (with similar terms) between UBER and Rite Aid, a leading provider of health products and services and the 100% owner of Bartell Drugs.

Previously, UBER also partnered with GetSwift Technologies Limited, a technology products and services provider, on September 21, 2021, to integrate and deliver GetSwift's portfolio of best-in-class technology products and services on its platform.

H1FY21 Results: The company reported a 32.38% increase in revenues to USD 6.83 billion during H1FY21 (ended June 30, 2021) compared to USD 5.16 billion during H1FY20, mainly due to an increase in Gross Bookings. In addition, for the first time, UBER reported a positive net income (attributable to the common shareholders) of USD 1.04 billion during H1FY21 vs. a net loss of USD 4.71 billion reported in H1FY20. As of June 30, 2021, its cash and cash equivalents (including short-term investments) were USD 5.00 billion, with a total debt of USD 7.80 billion.

Quarterly Gross Bookings (Source: Q2FY21 Earnings Presentation, August 04, 2021)

Key Risks: UBER generated 22% of its Mobility Gross Bookings in FY20 from only five metropolitan areas, i.e., Chicago, Los Angeles, and New York City (US), Sao Paulo (Brazil), and London (UK), making it vulnerable to any economic downturns in these regions.

Outlook: In its Q2FY21 press release, UBER indicated that it anticipates its Adjusted EBITDA loss in Q3FY21 to be less than USD 100 million, with record Gross Bookings ranging between USD 22 and 24 billion.

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.

UBER Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: UBER's share price has declined by 11.66% in the past six months and is currently at a mid-point of the 52-week range of USD 32.90 to USD 64.05. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 71.17. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 56.75. Considering the company's brand name, market dominance, improvement in financials, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 47.13, up 1.07% as of September 27, 2021, 3:18 PM ET.

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

*The reference data in this 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 or if the price closes below the support level. 

Medifast, Inc.

MED Details

Medifast, Inc. (NYSE: MED) is focused on the production, distribution, and sale of OPTAVIA brand weight loss, weight management, and other nutritional and health-related products. By combining elements of direct selling and employing a specialized direct-to-consumer sales technique, MED has created a unique business model in which subscription-based meal-plan purchases account for 91% of its income. MED has also expanded to the Asia Pacific markets, currently operating in Hong Kong and Singapore.

Launching OPTAVIA App: MED announced the introduction of the OPTAVIA app on August 11, 2021, a new digital tool for clients that offers Fit & Greens recipes and access to purchase history, auto-ship data, and other relevant information. This app is only available to OPTAVIA Community members and will be constantly enhanced based on direct feedback from users.

H1FY21 Results: The company reported a sharp uptick of 84.42% in revenues to USD 734.86 million during H1FY21 (ended June 30, 2021) compared to USD 398.46 million during H1FY20, due to growth in active earning OPTAVIA Coach count and productivity per active earning. As a result, its net income improved to USD 88.03 million during H1FY21 from USD 40.41 million reported in H1FY20. As of June 30, 2021, the company had cash and cash equivalents (including investment securities) of USD 197.43 million, with no outstanding debt.

On September 09, 2021, MED declared a dividend of USD 1.42 per share, payable on November 08, 2021, to shareholders of record on September 21, 2021. The company has been consistently paying dividends over the last five years, as depicted in the chart below (every D represents a dividend payment):

Consistent Dividend Yield (Source: REFINITIV)

Key Risks: A substantial amount of MED's food and other items are supplied by third-party producers. Therefore, if it is unable to get adequate quantities, quality, and variety of foods from these manufacturers in a timely and cost-effective manner, it might impact MED's ability to fulfill its clients' orders in a timely and cost-effective manner, resulting in a decline in its financial state of affairs.

Outlook: MED forecasts FY21 sales to be in the range of USD 1.425 – 1.525 billion and FY21 EPS to range from USD 12.70 – 14.17, based on an effective tax rate of 23.25 – 24.25%, according to its Q2FY21 press release.

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.

MED Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: MED's share price has fallen 23.04% in the past three months and is currently leaning towards the mid-point of the 52-week range of USD 139.59 to USD 336.99. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 37.25. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 257.51. Considering the significant dip in the stock price, strong track record, steady dividend yield, robust ROE, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 211.60, up 3.89% as of September 27, 2021, 10:43 AM ET.

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

*The reference data in this 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 or if the price closes below the support level.

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.