ON24, Inc.

ONTF Details

Introduction of ON24 Breakouts: ON24, Inc. (NYSE: ONTF) provides a cloud-based digital experience platform that makes it convenient for clients to create, scale and personalize engaging experiences and drive growth. The market capitalization of the company as on 28 April 2021 stood at ~$2.12 billion. The company has recently announced the introduction of ON24 Breakouts, which is a new engagement and collaboration functionality in the ON24 Digital Experience Platform. It allows the marketing and sales team to connect with audiences several ways after their customized and branded digital experiences.

Partnership with Outreach: The company has recently announced that it will integrate ON24 Intelligence with Outreach, which will allow joint customers to access ON24 prospect engagement data directly within the Outreach platform.

FY20 Financial Performance: During the year, the company reported an increase in revenue by ~76% to $156.9 million as compared to the previous year. Digital experience platform business revenue grew by 92% to $154.8 million. It reported an operating income of $21.8 million during the year as compared to a loss of $16.1 million in 2019. The net income stood at $20.8 million during the year.

FY20 Financial Performance (Source: Company Reports)

Key Risks: The company operates in a space where there is stiff competition to gain market share by the players. As such, it has to look for product innovations that enhance customer experience and engagement.

Outlook: The company expects revenue of $48.5 million to $49 million in the first quarter of FY21 and an operating income of $0.5 million to $1 million. It anticipates the full-year revenue to be around $205.5 million to $208.5 million in FY21, and non-GAAP operating loss of negative $5 million to negative $2 million. The company will announce its Q1FY21 financial results on 12 May 2021.

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: On 29 March 2021, the company has announced that Byron Bardy has joined the company as vice president of corporate development and strategic alliances. The stock of ONTF is trading below its average 52-weeks’ levels of $81.98-$40.00. The stock of ONTF gave a positive return of ~0.57% in the past one month and a positive return of ~4.91% in the past one week. On a technical analysis front, the stock of ONTF has a support level of ~$42.496 and a resistance level of ~$49.96. 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 that the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the robust financial performance and optimistic guidance outlook. For the purpose, we have taken peers such as Bottomline Technologies (DE) Inc (NASDAQ: EPAY), Domo Inc (NASDAQ: DOMO), InterDigital Inc (NASDAQ: IDCC), to name a few. Considering the expected upside in valuation and current trading levels, decent financial performance, optimistic revenue guidance, key partnerships and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $45.85, down by 1.46% as on April 28, 2021.

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

Arbutus Biopharma Corporation

ABUS Details

Business Update: Arbutus Biopharma Corporation (NASDAQ: ABUS) is a biopharmaceutical company focused on a cure for people with chronic hepatitis B virus (HBV) infection. The market capitalization of the company as on 28 April 2021 stood at ~$333.45 million. As per a recent update, the company has announced that it has entered into a collaboration with X-Chem, Inc. (X-Chem) and Proteros biostructures GmbH (Proteros). The collaboration is regarding the discovery research and license agreement on the research of novel inhibitors targeting the SARS-Cov-2 nsp5 main protease (Mpro). The purpose of the agreement is to accelerate the development of pan-coronavirus agents to treat COVID-19.

FY20 Performance Update: During the period, the net loss narrowed down to $75.9 million as compared to a loss of $164.9 million during the previous corresponding year. It ended the period with a cash position of $123.3 million as of 31 December 2020, compared to $90.8 million as of 31 December 2019. As per the management, the current data set for AB-729, its lead compound in development for HBV, has grown over the past 12 months.

FY20 Financial Performance (Source: Company Reports)

Key Risks: The company faces the risk of profitability with significant resources being directed towards R&D. Any adverse results of its trials might have an impact on the earnings of the company.

Outlook: The company expects to get important insights in 2021 regarding the potential therapeutic value of several compounds in its proprietary HBV pipeline. It has initiated the screening of its proof-of-concept Phase 2 clinical trial, which combines AB-729 with Assembly Biosciences' lead core inhibitor candidate. The company has announced that it will schedule its Q1FY21 results on 5 May 2021.

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: On 16 March 2021, the company has announced that it has received regulatory approval to initiate a Phase 1a/1b clinical trial with AB-836, for the purpose of treatment of chronic Hepatitis B Infection. The stock of ABUS is trading below its average 52-weeks’ levels of $9.02-$1.02. The stock of ABUS gave a positive return of ~4.90% in the past one month and a positive return of ~17.52% in the past six months. On a technical analysis front, the stock of ABUS has a support level of ~$2.9 and a resistance level of ~$4.67. 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 that the company can trade at a slight premium to its peer average EV/Sales (NTM Trading multiple), considering the collaboration with strategic partners, and an improvement in cash position. For the purpose, we have taken peers such as Arrowhead Pharmaceuticals Inc (NASDAQ: ARWR), Alnylam Pharmaceuticals Inc (NASDAQ: ALNY), F-Star Therapeutics Inc (NASDAQ: FSTX), to name a few. Considering the expected upside in valuation and current trading levels, improvement in top-line and reduction in losses, collaboration with key partners and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $3.42, down by 1.16% as on April 28, 2021.

ABUS 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.

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