goeasy Ltd. 

goeasy Ltd. (TSX: GSY), is a Canada-based full-service provider of goods and alternative financial services operating in two segments: easyfinancial and easyhome. It offers merchandise leasing of household furnishings, appliances, and home electronic products to consumers under weekly or monthly leasing agreements.

Why Should Investor Book the Profit?

• Lower same store revenue growth: The company's same-store revenue growth rate in Q1 2021 was lower than in Q1 2020, owing to reduced demand induced by the COVID-19 pandemic. In addition, the Company has faced higher-than-normal loan protection insurance claim expenses, which lower the net commissions generated on this program, as a result of the COVID-19 pandemic's increased unemployment rates.
  

• Drop in Net loan advances under easyfinancial: Under the company’s main operating segment “easyfinancial” the net loan advances issued to new customers in the reported quarter dropped to 56%, down from 59% in the previous corresponding period. We believe a drop in net loan advances to new customers is not a healthy sign.
  

• Exhausting Long-term Trend: On the weekly price chart, Average Directional Index (ADX) indicates that the uptrend is in the GSY shares are weakening now. After a spectacular rally from CAD 21.08 to CAD 168.49, ADX hovering above 44.94, which indicates that the long-term trend in tapering now, and up for a potential downside. Also, the 14-day RSI is hovering in overbought zone at 73.80, which suggests that the stock price may consolidate or correct from the current levels.

Source: REFINITIV, Analysis by Kalkine Group

• Trading at Stretched Valuation: The stock is trading at a stretched valuation. The stock is available at a forward Price to Book Value multiple of 2.94x, which is quite high against the industry average of 1.08x. Also, the stock is available at a forward PE multiple of 14.47x, which is higher than the industry average of 10.79x.

Stock recommendation

The first quarter continued to highlight the strength and resilience of the business with improved originations, structurally lower credit losses and strong operating margins. On the flip side the company also witnessed lower same store revenue growth on overall basis along with a drop in the net loan advances issued to new customers, which are the sign of worry. On the technical aspect, the Average Directional Index (ADX) indicator on the weekly chart indicates that the uptrend is in the GSY shares are weakening now, and the 14-day RSI is also hovering in overbought zone, which suggests that the stock price may consolidate or correct from the current levels. Moreover, the stock is trading on a stretched valuations compared to the industry. Therefore, based on the above rationale, we recommend a “Sell” rating on the stock at the closing price of CAD 167.67 on July 23, 2021.

One-Year Technical Price Chart (as on July 23, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Aurinia Pharmaceuticals Inc.

Aurinia Pharmaceuticals Inc. (TSX: AUP) is a clinical-stage pharmaceutical company with a focus on developing and commercialization of the cure for patients suffering from serious diseases with high unmet medical needs. 

Why should Investor Sell the stock?

As per the recent announcement, the company would voluntarily delist its common shares from the Toronto Stock Exchange (TSX) with effect from the close of July 30, 2021. Following the delisting, Aurinia Pharmaceuticals would be eliminated from the S&P/TSX Composite Index before the open of trading on August 03, 2021.

Key Highlight:

• On January 2021, the company received U.S. Food and Drug Administration (FDA) approval for LUPKYNIS+, which is used for immunosuppressive therapy regimens to treat adult patients with active lupus nephritis (LN. The company has three main customers for U.S. commercial sales of LUPKYNIS+. Meanwhile its voclosporin variant is sold European Union, Japan United Kingdom, Russia, Switzerland, Norway, Belarus, Iceland etc.
• For the first quarter of FY21, AUP posted its income of USD 0.914 million, as compared to an income of USD 0.030 million in pcp. The company reported a net loss of USD 50.379 million, widened from a loss of USD 25.932 million in Q1FY20. The quarter witnessed a higher selling, general and administrative cost (USD 39.282 million v/s USD 11.053 million in pcp), while research & development expense (USD 9.833 million v/s USD 13.835 million in pcp) stood lower than pcp.

Stock Recommendation:

The company would voluntarily delist the common shares from the Toronto Stock Exchange (TSX) effective as of the close of trading on July 30, 2021. The Company’s common shares will no longer be traded on the TSX but will continue to trade on the Nasdaq Capital Market (Nasdaq) under the symbol AUPH. Pursuant to Sec. 720(b) of the TSX Company Manual, shareholder approval is not required as an acceptable alternative market exists for the listed securities. Hence, considering the aforementioned fact, we recommend the investors to exit their long position and recommend a “Sell” rating on the stock at the closing price of CAD 14.29 on July 23, 2021.

One-Year Price Chart (as on July 23, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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.