Purple Innovation, Inc.

PRPL Details

PRPL Unveils Series of Products: Purple Innovation, Inc. (NASDAQ: PRPL) designs and manufactures premium, branded, and comfort products that include mattresses, pillows, seat and back cushions, etc., to name a few. On 15 June 2021, the company informed the market regarding the development of its existing pillow product offerings called, The Purple Harmony Pillow. Notably, the company also remains on track to unveil the latest Purple TwinCloud Pillow. Featured by durability, cooling, and adjustable support enhancements, the latest product is designed to develop incredible versatility and boost sleep conditions.

Q1FY21 Results Update: The company has posted an increase of ~52% in revenues to $186.4 million during the quarter. There has been improvement in the direct-to-consumer revenue by 54.8%, and wholesale revenue increased by 47.6% year over year. The company’s cash position stood at $103.8 million as of 31 March 2021.

Revenues Highlights (Source: Analysis by Kalkine Group)

Key Risks: The company is dependent on the readiness of raw material at an encouraging price for the efficient functioning of its business. Any challenge to acquire the same might impact on the company's production limits. 

Outlook: The company has upgraded its FY21 outlook on the back of impressive results in Q1FY21. It now expects full-year revenue to be in the range of $860 million and $900 million (up from its previous range of $840 million to $880 million), and adjusted EBITDA to be between $95 million and $105 million (previously $90 million to $100 million). The company is set to host a Virtual Investor and Analyst Session on June 29, 2021.

Valuation Methodology: EV/Sales Multiple 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: On June 4, 2021, the company appointed Patrice Varni as Chief Marketing and Digital Officer at its Lehi, UT headquarters. The stock of PRPL is trading below its average 52-weeks’ levels of $41.08-$16.7. The stock of PRPL gave a positive return of ~23.08% in the past nine months and a negative return of ~8.68% in the past one month.  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 median EV/Sales (NTM trading multiple), considering the decent financial performance and upgrades in guidance level for FY21. For this purpose, we have taken peers such as Tempur Sealy International Inc (NYSE: TPX), Lowe's Companies Inc (NYSE: LOW), to name a few. Considering expected upside in valuation and current trading levels, robust financial performance in Q1FY21, decent cash balance, upgrade in guidance level and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $26.50, up by ~1.96% as on June 21, 2021.

PRPL Daily Technical Chart, Data Source: REFINITIV

Beam Global

BEEM Details

BEEM Expands EV Charging Program: Beam Global (NASDAQ: BEEM) is involved in the provision of sustainable technology for electric vehicle (EV) charging, outdoor media, and energy security. On June 17, 2021, the company stated that the state of Hawaii utility implemented two EV ARC™ solar-driven EV charging systems and an ARC Mobility™ trailer. These utilities are gradually embracing BEEM’s off-grid solutions in order to reduce the overall expenditure and boost resiliency.

1QFY21 Key Financial Highlights: During the period, the company reported total revenue of $1.37 million, compared to revenues of ~$1.32 million reported in the year-ago period. The growth was primarily on the back of continued product shipments to municipalities and shipment of systems into federal, academic, utility and enterprise segments. The company reported a net loss of $1.25 million in 1QFY21, compared to $0.942 million reported in 1QFY20. As at 31 March 2021, the company’s cash balance stood at $28.21 million, up from $26.7 million as at December 31, 2020.

Revenues Highlights (Source: Analysis by Kalkine Group)

Key Risks: The COVID-19 led virus outbreak and its ongoing impact may have an adverse effect on the company’s financial position, due to delay in contracts and shipments.

Outlook: The company opines that a favorable blend of federal, state, and local spending on EV charging infrastructure, along with higher workplace charging, post vaccine in 2HFY21, is expected to boost the level of demand for the company’s products.

Valuation Methodology: EV/Sales Multiple 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: The stock of BEEM is trading below its average 52-weeks’ levels of $75.9-$6.73. The stock of BEEM gave a positive return of ~32.46% in the past one month and a negative return of ~22.24% in the past three months.  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 discount as compared to its peer average, considering the NTM trading multiple of the company with respect to the industry and increase in net loss in 1QFY21. For this purpose, we have taken peers such as Blink Charging Co (NASDAQ: BLNK), Energous Corp (NASDAQ: WATT), to name a few. Considering the expected upside in valuation and current trading levels, increase in top-line in Q1FY21, decent cash balance, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $33.74, down by ~5.12% as on June 21, 2021.

BEEM 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.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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