Amkor Technology Inc

Amkor Technology Inc (NASDAQ: AMKR) is an Arizona, United States-based semiconductor manufacturing Company, which is a provider of outsourced semiconductor packaging and test services.

Rationale for Valuation – Expensive at USD 24.21

• The Company is trading near a 52-week high point.
• The improved profitability, free cash flow doubled and ending the year with all-time lower net debt.
• In December 2020, the Company had a Debt/Equity ratio of 0.50x, which is higher than the industry median.
• The operating landscape remains highly volatile with the continuing uncertainty due to Covid-19 pandemic.
• From the technical standpoint, 14-day RSI stood at ~85.44 (overbought zone), which means the stock price could decline in the short term.

Key Risks

• Excessive competition in the industry could affect the revenue and profitability of the Group.
• Macroeconomic headwinds are expected in the short run with the global spread of Covid-19 virus.

Financial Highlights - Q4 FY20 and FY20 (for the period ended 31 December 2020, as on 8 February 2021)

(Source: Company Website)

• The Company generated a record Q4 revenue of USD 1.37 billion, which was up by 16.3% year-on-year. The revenue for FY20 increased by 24.6% year-on-year.
• The Company has improved its profitability metrics in the fourth quarter and full-year 2020 as compared with the corresponding period of the last year.
• It witnessed a sixth consecutive year of positive free cash flow, with a free cash flow of USD 221 million, net cash from operations of USD 770 million and all-time lower net debt of USD 322 million.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

In Q1 FY21, the Company expects revenue to be 15% above Q1 FY20, with better than seasonal demand for smartphones and continued recovery in automotive. Q1 net income is expected to be USD 70 million to USD 118 million. The Company saw 2021 as another good growth year, with high-performance computing and 5G deployment. Full-year 2021 capital expenditures are expected to be approximately USD 700 million. However, the business is more exposed to the economic uncertainties arising from the Covid-19 pandemic. The Group is presently trading near the 52-week high, raising doubts at the upside potential at the current price level. The stock made a 52-week low and high of USD 5.40 and USD 25.90, respectively.

Based on the factors as highlighted above, we believe the stock of Amkor Technology Inc is “Expensive” at the closing price of USD 24.21 (as on 12 February 2021), with support from few catalysts needs to be evaluated at a later stage such as decent prospects of US market and improved investors sentiments.

Avid Technology Inc

Avid Technology Inc (NASDAQ: AVID) is an open and integrated technology platform Company, which develops a variety of software and system.

Rationale for Valuation – Expensive at USD 23.50

• In the third quarter of 2020, the Company has higher-margin revenue streams and improving the cost structure, while it saw strong growth in profitability.
• The Company has lower liquidity in September 2020 (against the industry median), with a current ratio of 1.08x, reflecting insufficient current assets to pay its short-term obligations.
• From the technical standpoint, 14-day RSI stood at ~72.25 (overbought zone), which means the stock price could decline in the short term.

Key Risks

• Due to the Covid-19 pandemic, the Company could face liquidity risk during the crisis period. The business must adhere to the stringent regulatory requirements.
• Moreover, consumer confidence is battered in recessionary economic conditions.

Recent News

On 4 February 2021, the Company announced that it had downloaded over 3 million copies of the ‘First’ Versions of Avid’s Creative Tools.

Q3 FY20 Trading Update (as on 28 October 2020)

• In the third quarter of 2020, the total revenue increased by 14.1%
• During the quarter, the subscription revenue was up by 73.9% year-over-year and the subscription and Maintenance revenue increased by 11.6% year-over-year.
• Adjusted EBITDA for Q3 FY20 surged by 51.2% year-over-year, while the adjusted EBITDA margin was up by 770 basis points year-over-year.
• On 30 September 2020, the annual Contract Value rose by 6.5% as compared with the corresponding period of the last year.
• It had USD 49.1 million in cash and cash equivalents as of 30 September 2020.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Conclusion

The Company has shown strong signs of sequential recovery during the third quarter, with the introduction of enterprise subscription and the creative software subscription showed continued growth. The Company expects that it will generate strong free cash flows and has the right cost structure. AVID’s operations were not materially impacted by the covid-19 pandemic, while the market remained highly uncertain. Moreover, the Company works in a challenging environment that requires continuous investment, sometimes at the profitability cost, to stay ahead of competitors. The Group is presently trading near the 52-week high, raising doubts at the upside potential at the current price level. The stock made a 52-week low and high of USD 4.67 and USD 24.47, respectively.

Based on the factors as highlighted above, we believe the stock of Avid Technology Inc is “Expensive” at the closing price of USD 23.50 (as on 12 January 2021), with support from few catalysts needs to be evaluated at a later stage.

Airbnb Inc

Airbnb Inc (NASDAQ: ABNB) is a California, United States-based vacation rental Company, which connects hosts and guests online or through mobile devices to book spaces.

On 25 February 2021, the Company will release its fourth quarter and full-year 2020 financial results.

Rationale for Valuation – Expensive at USD 212.68

• The Company is trading near a 52-week high, and EV/Sales multiple is significantly higher as compared to corresponding multiple of the Software & IT Services industry, reflecting overstretched valuations.
• The outlook for the Company seems dim in the near-term due to the continued impact on the International travel and may face further closure.
• From the technical standpoint, 120-day RSI stood at ~57.11, which means the stock price could decline in the short term.

Key Risks

• The economic downturn can massively impact consumer spending and leisure expenditures.
• Moreover, the key projects could also fail to deliver as per the transformation programme.

Recent News

On 12 January 2021, the Company stated that Brian Chesky, CEO, had participated in the 2021 Reuters NEXT summit.

On 10 December 2020, Airbnb has announced the pricing of its initial public offering (IPO) of 51,323,531 shares of Class A common stock, at a public offering price of USD 68.00 per share. It has started its trading on the Nasdaq Global Select Market from 10 December 2020.

One Month Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

There is no financial performance unveiled by the Company currently, and the stock listing was done lately on 10 December 2020. The Company is in the development stage, and it relied on the cash balances and fundraised from the stock market for all the operational activities. Overall, it remains difficult to provide forward-looking guidance due to the ongoing uncertainty. The Group is presently trading near the 52-week high, raising doubts at the upside potential at the current price level. The stock made a 52-week low and high of USD 121.50 and USD 219.94, respectively.

Based on the factors as highlighted above, we believe the stock of Airbnb Inc is “Expensive” at the closing price of USD 212.68 (as on 12 February 2021), with support from few catalysts needs to be evaluated at a later stage such as decent prospects of US market and improved investors sentiments. 

*All forecasted figures and Industry information have been taken from Refinitiv, Thomson Reuters.

*Dividend Yield may vary as per the stock price movement.

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