Amicus Therapeutics Inc

FOLD Details

FY20 Results Highlights: Amicus Therapeutics (NASDAQ: FOLD) is a global biotechnology company that is engaged in the business of discovering, developing, and delivering high-quality medicines for treating rare metabolic diseases. The company reported strong growth in its overall revenue, up by 43% YoY to $260.9 million. Operating expenses in GAAP terms rose to $476.8 million from $464.3 million in FY19, owing to the impact of sustained investments in its pipeline. This was partly offset by lower travel and third-party costs. Meanwhile, it witnessed a decline in its net loss to $276.9 million from a net loss of $356.4 million in FY19.

FY20 Results Highlights (Source: Company Reports)

Q1FY21 Results Highlights: FOLD has posted a decent performance in Q1FY21 with total revenue growth of 9.8% YoY to $66.4 million with reported revenue supported by a favourable impact of the currency movement of $3.4 million, or 5.7%. Further, the net loss of the company was reduced to $65.7 million in Q1FY20 from a net loss of $88.9 million in Q1FY20.

Outlook: The company has guided achieving overall Galafold revenue in the range of $300 million to $315 million in FY21. The double-digit revenue growth is likely to be fuelled by sustained operational growth as well as commercial execution across all major markets. With cash, cash equivalents, and marketable securities of $417.4 million at the end of 31 March 2021 along with expected growth in revenues, FOLD remains confident of meeting the funding requirements of its operations and ongoing research programs through to self-sustainability.

Key Risks: The company is exposed to the risks related to the fluctuations in the foreign currency movement. The company’s sustained revenue generation depends highly on its first product, Galafold®. Any failure to fruitfully commercialize Galafold® or delay would hurt its business performance. Further, delay in getting the necessary regulatory approvals for product commercialisation would adversely affect its revenue.

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

Source: 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: FOLD has delivered a 6-months and 9-months return of ~-60.46% and ~-37.33%, respectively. The stock is trading lower than the average of the 52-week high price of $25.39 and 52-week low price of $8.68, which indicates a good opportunity for accumulation. We have valued the stock using EV/Sales multiple-based illustrative relative valuation and have arrived at a target price that reflects a rise of low double-digit (in % terms). We have assigned a slight premium to EV/Sales Multiple (NTM) (Peer Average), considering its healthy revenue growth guidance for FY21 along with expected sustained strong global growth of Galafold in 2021 and decent liquidity position. For relative valuation, we have taken peers like ImmunoGen Inc (IMGN.OQ), Insmed Inc (INSM.OQ), to name a few. Considering the aforementioned factors and the associated risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $9.00 per share on 27^th May 2021.

FOLD Daily Technical Chart, Data Source: REFINITIV

Tellurian Inc.

TELL Details

Q1FY21 Result Highlights: Tellurian Inc. (NASDAQ: TELL) is developing a portfolio of natural gas production, LNG marketing, and infrastructure assets that includes an LNG terminal facility and related pipelines. The existing natural gas production assets stand at 9,373 net acres and have interests in 72 producing wells. The company has a market capitalization of ~US$1.59 billion as of 27^th May 2021. For the first quarter ended 31 March 2021, the company produced 3.3 billion cubic feet (Bcf) of natural gas versus 3.9 Bcf in Q4FY20. The upstream assets include 9,704 net acres and interests in 72 producing wells as of 31 March 2021. It closed Q1FY21 with $58.7 million of cash and cash equivalents and ~$17.0 million in short-term borrowings and generated ~$8.7 million in revenues from natural gas sales. Further, it reported a net loss of ~$27 million, or $0.08 per share (basic and diluted).

Key Data for Q1FY21 (Source: Company Reports)

10-Year LNG Agreement Signed with Gunvor Singapore Pte Ltd: As per the release dated 27 May 2021, the company and Gunvor Singapore Pte Ltd announced a liquefied natural gas (LNG) sales and purchase agreement (SPA) for three mtpa for a 10-years. The LNG is expected to be delivered free on board (FOB) from Tellurian’s Driftwood LNG

Risk: TELL’s primary risk is that it would be requiring additional equity and/or debt financing in the future to complete the Driftwood Project and to expand its other operations and may not be able to secure such financing on acceptable terms, or at all.

Outlook: The company is riding on the catalyst that global LNG demand that grown 7% annually over the last five years, with limited capacity additions on the horizon. Further, it will be the first integrated global gas pure-play in the U.S. in the future. Meanwhile, it announced 3.0 mtpa of definitive offtake and negotiating SPAs with additional counterparties. Moreover, it is debt-free as of 2QFY21 with ~$58 million of cash on hand. Importantly, it re-started drilling program in 2QFY21, supports corporate G&A and validates integrated model assumptions.

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

Stock Recommendation: The stock has witnessed an increase of ~338.3% in 9 months and jumped ~270.5% in 1 year. The stock is currently trading above the average 52-week’s price level range of $0.68 and $4.38. We have applied EV/Sales multiple based illustrative relative valuation method and have arrived at a target price with a correction low double-digit (in % terms). We have applied a slight discount to EV/Sales Multiple (NTM) (Peer Average) considering negative net profit margins and expectation of shortage of funds in the future period. Considering the aforesaid facts and current trading levels, we suggest investors to book profits and wait for a better entry level. Hence, we give a “Sell” rating on the stock at the current market price of $3.89 per share, up 22.71% on 27^th May 2021.

TELL Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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