Alteryx, Inc.

AYX Details

Decent Rise in Q3FY20 Revenue: Alteryx, Inc. (NYSE: AYX) is a leader in analytic process automation and helps organizations in delivering high-impact business outcomes and the rapid upskilling of their modern workforce. As on 30 November 2020, the company’s market capitalization stood at ~$7.98 billion.

Q3FY20 Result Highlights: For Q3FY20, the company reported revenue of $129.7 million, up 25% on pcp. Further, the company’s gross profit for the quarter stood at $119.3 million, higher than $93.8 million in pcp. During the quarter, the company added 241 net new customers. At the end of the quarter, the company had 6,955 customers, up 24% on pcp. As at 30 September 2020, the company had cash and cash equivalent of $95.95 million.

Q3FY20 Results (Source: Company Reports)

Outlook: For Q4FY20, the company expects its revenue to be in the range of $146.0 million to $150.0 million, representing a decline of 7% - 4% on pcp. Further, the company’s non-GAAP income from operations is expected to be in the range of $24 million to $28 million. For FY20, the company expects its total revenue to be in the range of $481 million to $485 million, representing an increase of 15% to 16% year-over-year.

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

EV/Sales Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Month

Stock Recommendation: The company intends to participate in the Raymond James Technology Investors Conference, which is scheduled to happen on 7 December 2020. The stock of AYX has corrected by 17.95% in the last six months and is trading below the average of its 52-weeks price level band, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of ~$107.95 and resistance of ~$144.62. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and have arrived at a target price of a low double-digit upside (in % terms). For the purpose, we have taken peers like Oracle Corp (NYSE: ORCL), Splunk Inc (NASDAQ: SPLK), and Datadog Inc (NASDAQ: DDOG). Considering the company’s decent performance in Q3FY20, FY20 guidance, and current trading levels, we give a “Buy” recommendation on the stock at the closing price of $119.84, up by 0.33% on 30 November 2020.

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

Sonos, Inc.

SONO Details

$50 Million Stock Repurchase Program: Sonos, Inc. (NASDAQ: SONO) is a developer and manufacturer of wireless home audio products, including smart speakers. As on 30 November 2020, the company’s market capitalization stood at ~$2.51 billion. On 18 November 2020, the company announced that it’s Board has approved a common stock repurchase program of up to $50 million. The company’s existing cash and cash equivalents or future cash flow will be used to fund the purchases.

FY20 Result Highlights: For FY20, the company reported total revenue of $1.326 billion, up 5% on pcp. Notably, the company’s direct-to-consumer revenue grew by 84% over the year and represented a record 21% of total revenue compared to 12% last year. In FY20, the company’s Gross margin increased 130 basis points to 43.1%. The company’s free cashflow for FY20 stood at $129.0 million compared to $97.4 million last year.

FY20 Results (Source: Company Reports)

Outlook: For FY21, the company expects its adjusted EBITDA to be between $170 million to $205 million, representing growth in the range of 57% to 89% on FY20. FY21 gross margin is expected to be 45.3% to 45.8%, representing a 220 to 270 basis point improvement year-over-year.

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

EV/Sales Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Month

Stock Recommendation: The stock of SONO has provided a return of 52.32% in the last one month and recently touched its 52-weeks high price of $23.08. On the technical analysis front, the stock has a support level of ~$19.95 and resistance of ~$23.02. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and have arrived at a target price with a correction of low single-digit (in % terms). For the purpose, we have taken peers like Universal Electronics Inc (NASDAQ: UEIC), Zagg Inc (NASDAQ: ZAGG), Turtle Beach Corp (NASDAQ: HEAR), etc. Considering the spike in the stock price in the last one month, current trading levels and valuation, we are of the view that most of the positive factors of the company have been discounted at current trading levels. Hence, we suggest investors to wait for a better entry level and give an “Expensive” rating on the stock at the closing price of $22.24, up by 4.71% on 30 November 2020.

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

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