Sundance Energy Inc.

 

SNDE Details
 
Operating Cost Reduction Initiatives as Key Catalyst: Sundance Energy Inc. (NASDAQ: SNDE) is focused on the development and production of oil and gas. The company has a robust asset base with decent expertise, cash flow, and operational efficiency to maintain long-term progress and liquidity. The company recently updated that the transaction of redomiciling from Australia to the United States has been fully implemented.
 
Managerial Changes: On 10 December 2019, Sundance Energy Inc. announced that its Board of Directors appointed Stephen J. McDaniel as an Independent, non-executive member.Meanwhile, Michael D. Hannell will continue to serve the company as Chairman till 31 December 2019.
 
Financial Highlights for Third Quarter Ended 30 September 2019: Sundance Energy Inc. posted third-quarter 2019 results, wherein total revenue stood at $51.1 million, down 5% year over year. Net sales volumes for the quarter came in at 1,251,144 boe, an increase of approximately 22% year over year. Sales volume for the quarter was approximately 64%, 20% and 16% of oil, gas and NGLs, respectively. The company reported net oil sales volume of 8,677 Bopd. Gas and NGL sales volumes came in at approximately 4,923 Boe per day during the quarter. The company’s net income during the quarter came in at $13.4 million. Net margin came in at 33%. Total cash operating costs during the quarter stood at $13.83 per boe, a decrease of ~24% year over year and around 8% down on the previous quarter.
 

Q3 Cash Operating Costs (Source: Company Reports)
 
Balance Sheet & Cash Flow Details:  The company exited the quarter with cash, trade and other receivables of $23.1 million. Net cash provided by operating activities for the nine months ended 30 September 2019 was ~$103.7 million. 
 

Fourth-quarter & FY19 Guidance (Source: Company Reports)
 
Outlook: The company expects fourth quarter average sales volume to be in the range of 13,500 - 14,000 boe/day.Sundance Energy Inc. expects oil cut of ~65% by sales volume for the coming quarter.

Coming to FY19 guidance, the company expects average sales volume to be in the range of 13,300 - 13,500 boe/day.

Stock Recommendation: As per NASDAQ, the stock is trading below the average of its 52-week high and low of $36.7 and $7.5, respectively. As on 30^th December 2019, the company’s market capitalisation stood at ~$0.14 billion. Additionally, the Dimmit assets disposition positions the company with a high-graded asset portfolio of oilier in greater economic locations. The stock has gained 59% in the last three months and 89.488% in the last one month. On the valuation front, the stock is trading at a price to cash flow of 1.4x as compared to 1.3x on TTM (Trailing Twelve Months) basis. Considering the recent price movement, mildly above-industry valuation, redomiciling and other factors, we have a wait and watch stance on the stock at the closed price of $20.37 per share, down by 1.97% on 30^th December 2019.
 
 
SNDE Daily Technical Chart (Source: Thomson Reuters)
 

 
Acasti Pharma, Inc.

 

ACST Details
 
Completion of the Trilogy Trial Remains on Track: A biopharmaceutical company, Acasti Pharma, Inc. (NASDAQ: ACST) is engaged in research and development along with the commercialization of omega-3 fatty acids. The company’s only prescription drug candidate, CaPre, is being built for the prevention and treatment of hypertriglyceridemia.
 
Financial Highlights for Second Quarter Ended 30 September 2019: Acasti Pharma, Inc.incurred a loss of 34 cents per share in the second quarter of FY20, narrower than the loss of 62 per share reported in the year-ago period. Research and development expenses for the period stood at CAD$5.25 million. The decrease was primarily due to nearing completion of Phase 3 clinical program coupled with a decrease in research contracts. General and administrative expenses more than doubled on year over year to CAD$2.38 million, primarily due to Directors’ and Officers’ insurance policy, along with higher corporate, accounting and legal fees. Sales and marketing expenses increased more than six times from the year-ago quarter and came in at CAD$1.02 million. This increase was due to higher headcount, marketing and consulting expenses.
 

Q2 Financial Highlights (Source: Company Reports)

Operating Highlights: The company reportedaloss from operating activities of CAD$8.7 million during the quarter as compared to a loss from operating activities of CAD$10.4 million reported in the year-ago quarter. The company saw further losses to CAD$28.3 million as compared to a loss of CAD$22.7 million reported in the year-ago quarter. 
 
Balance Sheet & Cash Flow Details:  The company exited the quarter with cash and cash equivalents of CAD$25.8 million. Net cash used in operating activities came in at CAD$8.3 million as compared to CAD$6.6 million in the prior corresponding quarter.
 
Outlook: The company expects to announce the top-line results of its Phase 3 TRILOGY 1 and TRILOGY 2 in January 2020.  The company expects its key product, CaPre could become the best in class omega 3, based on its Trifecta Effect and better bioavailability and a limited low-fat diet.  Atthe start of first quarter of 2020, the company intends to introduce the entire data set including results for non-HDL-C, LDL-C, VLDL, HDL-C and HbA1c at key scientific meetings.
 
Stock Recommendation: As per NASDAQ, the stock is trading above the average of its 52-week high and low of $3.08 and $0.69, respectively. As on 30^th December 2019, the company’s market capitalisation stood at ~$218.40 million. The company’s TRILOGY study has touched 100% patient randomization. Also, over 90% of the patients have completed their 6-month plan.  The company has also been rewarded $750,000 in grants from the Government of Canada. Recently, Acasti Pharma, Inc. partnered with Aker BioMarine to offer a supply of raw krill oil to boost product release and commercialization. These factors are expected to push the business in the days ahead. The stock has gained ~112% in the last six months and 234.69% in the last one year. Considering the sharp appreciation in the stock price coupled with the company’s intention to introduce the result of various trials, losses on the books, etc., we have a wait and watch stance on the stock at the closed price of $2.46 per share, down by 3.91% on 30^th December 2019. 
 
 
 
ACST Daily Technical Chart (Source: Thomson Reuters)

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